US Stock Market: Jobs data, Broadcom results to test stock rally near record highs

A fresh batch of U.S. labour-market data and quarterly results from semiconductor giant Broadcom are set to test a stock-market rally that has pushed U.S. equities close to record levels.

The S&P 500 posted a weekly gain and ended just over 1% below its August 13 record high. Investor sentiment was boosted by a stronger-than-expected quarterly report from artificial intelligence leader Nvidia, helping markets recover from an earlier pullback triggered by rising Treasury yields.

The focus now turns to the monthly U.S. employment report due on September 4, with investors looking for clues about the Federal Reserve's interest-rate path in the months ahead. According to Reuters, markets have become increasingly sensitive to economic data as the September policy meeting approaches.


The outlook for interest rates gained importance after comments from new Fed Chair Kevin Warsh on Friday prompted investors to raise their expectations of a possible rate hike at the central bank's next meeting. The Fed is weighing persistent inflation that remains above its 2% target against signs of weakness in the labour market.

August jobs data in focus

The August employment report is expected to provide a key test of the U.S. economy's resilience. A Reuters poll showed economists were expecting payrolls to increase by 58,000 during the month, while the unemployment rate was forecast at 4.1%.

The July employment report had surprised markets with a decline of 23,000 jobs, raising concerns about the strength of the labour market. Reuters reported that investors would be watching the August figures closely for signs of whether the weakness was temporary or part of a broader slowdown.

Despite those concerns, the U.S. stock market has remained resilient. The S&P 500 was up more than 12% for the year as August drew to a close, supported by strong corporate earnings and heavy investment in artificial intelligence infrastructure.

Market volatility has also remained subdued. The Cboe Volatility Index was near its lowest level of the year, while trading volumes during the week were below the 2026 average, Reuters reported.

Fed rate path under scrutiny

The jobs report could have a significant bearing on expectations for the Federal Reserve's next move. Recent economic data showed inflation continuing to run above the central bank's 2% annual target, complicating the outlook for monetary policy.

According to Reuters, Fed funds futures on Friday pointed to a 57% probability of a rate hike at the September meeting. A stronger-than-expected employment report, particularly if accompanied by faster wage growth, could reinforce expectations for tighter monetary policy.

Higher interest rates could create headwinds for equities by increasing borrowing costs for households and companies and potentially putting pressure on corporate valuations.

Investors will also monitor other economic indicators due during the week, including manufacturing and services activity. The previous reading from the Institute for Supply Management showed U.S. manufacturing activity rising to its strongest level in more than four years, Reuters reported.

Broadcom earnings in focus

Broadcom's quarterly results on Wednesday will provide another major test for investor enthusiasm around the artificial intelligence boom. The semiconductor company's market value was recently around $1.7 trillion, Reuters reported.

The results come after Nvidia delivered a strong quarterly performance and issued an unusually bullish revenue outlook, projecting a roughly 70% increase for its next fiscal year. The update helped revive investor confidence in AI-related stocks and broader technology shares.

Investors will be watching whether Broadcom can provide similar visibility into demand for AI infrastructure and future growth, Reuters reported.

Other technology companies, including Dell Technologies and Palo Alto Networks, are also scheduled to report results during the week.

With most S&P 500 companies having already released their second-quarter results, adjusted earnings for the index are on track to rise 34.5% from a year earlier, based on LSEG IBES data cited by Reuters.

The final stretch of the earnings season, combined with the August employment report and shifting expectations for Federal Reserve policy, could determine whether the U.S. stock rally extends towards fresh record highs or faces renewed volatility.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)