MPC Morning Call 5th September – Stocks rally into US jobs numbers as rate cut bets rise

Overnight – Stocks rally into US jobs numbers as rate cut bets rise

Stocks a fresh closing record high overnight as weaker-than-expected U.S. private payrolls data stoked optimism for a Federal Reserve rate cut this month.

Private-sector labor market data pointed to weakness in August, with ADP reporting just 54,000 job gains, the slowest pace since June and well below the 73,000 economists had forecast. Weekly jobless claims also rose to 237,000, higher than expectations, underscoring growing softness in hiring and employment conditions. The weaker data reinforced market bets on a Federal Reserve rate cut at its September 16–17 meeting, with CME’s FedWatch Tool now showing a near 97% probability of a 25-basis-point reduction. Attention now turns to Friday’s official nonfarm payrolls report, where economists expect 75,000 new jobs following a weak July reading.

Corporate earnings also drove market sentiment. Salesforce shares fell more than 4% after reporting disappointing quarterly results and issuing revenue guidance below Wall Street expectations. The company’s struggles to quickly monetize its AI platforms raised investor concerns, though losses were pared after Salesforce announced a $20 billion expansion of its share buyback program. Elsewhere in tech, newly listed Figma plunged over 18% on its maiden earnings report, despite beating revenue and earnings forecasts. Analysts flagged the stock’s rich valuation and rising competition, which have pressured its performance following its high-profile IPO in July.

Additional corporate movers included Texas Instruments (-3%) after its CFO highlighted weak demand pressures tied to U.S. tariffs. In retail, American Eagle Outfitters surged over 30% following stronger-than-expected Q2 earnings, standing out in a sector under pressure from slowing U.S. consumer demand. Overall, markets weighed weak labor data and soft corporate results against expectations of imminent Fed easing, with investor focus fixed on Friday’s employment report as the next catalyst.

Corporate Earnings

• Broadcomm (AVGO) +1% – the chip company forecast fourth-quarter revenue above Wall Street estimates on Thursday, bolstered by strong demand for its custom AI chips as enterprise clients invest heavily in data centers and machine learning applications. The company has been one of the biggest beneficiaries of the generative artificial intelligence boom, with hyperscale customers, including Google, adopting its custom accelerators due to their ability to process large quantities of data quickly. Its chips have also emerged as an alternative to Nvidia’s costly processors as companies look for hardware that can be tailored to specific needs as AI becomes increasingly advanced.