Wall Street's week: an oil shock, a jobs shock and 36 points

The S&P 500 closed on Thursday at 7,747.71, some 36 points — 0.47% — above where it finished the previous Friday. That flat number is the least interesting thing about the week and also rather the point of it. Between those two closes Brent crude went from $90 to nearly $96 a barrel, the 10-year Treasury yield reached its highest level since November 2023, and the argument on Wall Street stopped being about when the Federal Reserve would cut interest rates and became about whether it is about to raise them.

On Monday morning we told readers the week's real test was a run of American labour-market data ending in Friday's non-farm payrolls report — the monthly headcount from the Bureau of Labor Statistics that is the single most closely watched number in the US calendar. That run produced three contradictory answers in four days, and the last one was by far the loudest: employers added 162,000 jobs in August against the 53,000 economists had pencilled in.

Our own daily sentiment readings tell the story in miniature. We logged the week risk-off, risk-off, mixed, risk-on, mixed. Wall Street spent four sessions being pushed around by an oil shock and a bond market, got one day of genuine relief from a single Fed governor, and then had it taken back by a jobs report on Friday morning.

How the week unfolded

Monday opened risk-off and stayed there. US forces had struck Iranian rocket launchers on Larak Island in the Strait of Hormuz over the weekend, Iran retaliated against American air bases in Jordan, and Brent jumped more than 3% through $90. The energy and defence complex was the only clear winner. Underneath the geopolitics, though, the more consequential move was in bonds: the 10-year Treasury yield pushed above 4.75%, its highest since January 2025, as the market digested Fed Chair Kevin Warsh's hawkish Jackson Hole remarks from the Friday before. Traders were already pricing roughly a 57% chance of a September rate rise. The S&P 500 closed at 7,686.14.

We flagged Tuesday's ISM manufacturing survey as the week's first data test. It landed at 54.6, below both July's 55.6 and the 55.2 consensus — factories cooling, which in an ordinary week would have soothed the bond market. It did nothing of the sort. Tuesday was the week's worst session: the S&P 500 fell to 7,631.47 and the Nasdaq Composite dropped to 26,099.77, with chipmakers leading. The trigger we flagged that morning was a new one, and it has legs — credit-default-swap spreads on Oracle, Nvidia, Meta, Amazon and Alphabet have been widening as investors weigh the debt the hyperscalers are taking on to build data centres. Oracle's five-year spread had reached about 196.6 basis points. AI capital spending, in other words, is starting to be priced as a credit question rather than only an equity one.

Wednesday was our "mixed" session and the week's high-water mark for stress. The US struck Iranian oil tankers for the first time, Brent traded near $96, and the 10-year yield touched 4.814% — the highest since November 2023 — with rate-hike odds around 70%. The ADP survey of private payrolls, a privately compiled preview of the official figures, showed just 38,000 jobs added against forecasts near 47,000. That should have cooled hike expectations. It did not, because the oil price was doing the talking. The S&P 500 still ground out a gain to 7,666.60.

Thursday was the turn, and it came from a single voice. Fed Governor Christopher Waller said he would be inclined to hold rates steady at the 15-16 September meeting if inflation continues to improve, citing promising signs of disinflation. The 10-year yield eased back to around 4.78% and equities had their best day in a month: the S&P 500 rose 1.06% to 7,747.71, the Dow Jones Industrial Average added 624.16 points, or 1.18%, to 53,686.11, and the Nasdaq Composite gained 1.4% to 26,584.06. Weekly jobless claims at 206,000 and an ISM services reading of 55.4 sat comfortably in the background.

Friday is still trading as we publish — Wall Street does not close until 16:00 in New York, which is 21:00 in London — so there is no closing level for it yet. What we can report is that the payrolls print we had been pointing at all week came in at more than three times the forecast, and the market disliked it. Through the New York morning and into the afternoon the Dow was down around 250 to 300 points, roughly 0.5%, with the S&P 500 and Nasdaq each off about 0.3%. Rate-hike odds for September spiked towards 60% before easing back to something nearer a coin toss as traders weighed the jobs data against Waller's comments. June and July payrolls were also revised up by a combined 55,000, and the unemployment rate held at 4.1%.

The names that moved it

The week's corporate thread was a verdict on AI spending, and it was split rather than negative. Dell Technologies, which we flagged on Tuesday as that session's main scheduled event, was the standout: revenue of $47bn, up 58% year-on-year, an AI server backlog at a record $95bn and full-year guidance lifted to $192bn. The shares jumped about 9% in after-hours dealing. You can follow the company on our Dell page.

Broadcom is the name we flagged three days running, and it is the more instructive one. It beat: third-quarter revenue of $29.59bn, up 86% year-on-year, adjusted earnings of $3.32 a share, and AI semiconductor revenue up 221% to $16.7bn. The shares still fell around 5%, because fourth-quarter revenue guidance of $34.8bn came in under the $35.03bn analysts wanted. On numbers like those, a $230m shortfall against consensus is a rounding error — but it tells you how little forgiveness is currently priced into AI-linked shares. Our Broadcom page carries the detail.

The same pattern repeated across software. Snowflake surged 23% after hours on revenue of $1.55bn, up 35% and ahead of the $1.48bn expected, with guidance raised. GitLab rose 16% on a beat-and-raise — American shorthand for a company that exceeds the quarter's estimates and lifts its outlook at the same time. Yet MongoDB fell about 13% despite beating estimates and raising guidance. Beating is no longer sufficient.

Away from technology, Aon opened the week with a $17bn all-cash deal for USI Insurance Services from KKR, its largest acquisition to date, targeting $395m of annual run-rate synergies; the shares slipped about 2% on the debt funding it. Energy names — Halliburton, Chevron, Valero, Occidental and Exxon Mobil — were Monday's only real bid. And the consumer end took two hard knocks: Lululemon plunged, down as much as 18% on Friday, after second-quarter revenue of $2.415bn missed and full-year guidance was cut to a 5-7% revenue decline from roughly flat, while Fair Isaac fell after the Federal Housing Finance Agency ordered Fannie Mae and Freddie Mac to accept VantageScore from all lenders, ending FICO's long-held exclusivity in mortgage credit scoring. Guidewire Software also fell on soft first-quarter guidance. You can screen the week's movers on our screener.

What to watch next week

Next week brings the August CPI and PPI inflation reports, and after this week they carry more weight than usual: they are the last major price readings before the Federal Open Market Committee meets on 15-16 September, and they are what Waller explicitly conditioned his position on. Watch also whether the Strait of Hormuz situation feeds through into the energy component of those prints — Iran's foreign minister has said the waterway will not reopen without US concessions, and Brent has held near $95.