No Fairy Tale Ending

Not So Fast. U.S. stocks fell today, reversing earlier gains on a Jobs Friday that had analysts breaking out the "Goldilocks" references.

The Dow Jones Industrial Average fell 1.1% to lock in a third-straight weekly decline, this time at 3%. The Dow was up 1.2% at its intraday high, but couldn't hold on. The S&P 500 also pared early gains to close 1.1% lower.

The Nasdaq Composite dropped 1.3% to extend its recent losing streak to six trading days. That's the longest such streak for the tech-heavy index since Aug. 5, 2019, when it also fell for six-straight trading days. The index is down 11 of the past 14 trading days.

The about-face came after a jobs report that was initially viewed as a positive for stocks. The U.S. added 315,000 jobs in August, which was down from 526,000 in July. But the labor force participation rate rose by 0.3 percentage point to 62.4%.

Amid concerns about the Federal Reserve's efforts to combat inflation, the report seemed to hit a sweet spot for market observers. Indeed, I spotted a handful of strategists who went with a classic tale of a break-in and bears to describe the report as "just right." Investment strategist Louis Navellier was among them, calling it a "Goldilocks job report."

"The job report was strong enough to weaken recession fears but soft enough to raise hopes that the Fed won't consider a 100bp this month," he writes.

The report did ease some concerns about the Federal Reserve's coming interest rate decision. Barron's Jacob Sonenshine and Jack Denton note that after the report, pricing in the fed funds futures market showed a 56% chance of a three-quarter point hike, down from 75% on Thursday. Still, stocks couldn't hold on. They add:

While the jobs report makes an acceleration in inflation less likely, Wall Street is awaiting the release of the consumer price index on September 13. Economists expect an 8.7% annualized gain for August, which would be in line with the July result, but still below the June result of 9.1%. 

So stock traders don’t want to take too much risk while it remains unclear if the Fed will ease up on rate hikes.  

Traders will get some time off in the meantime—and so will we! Review & Preview will be back on Tuesday, following a day off for Labor Day.

Watch our weekly TV show on Fox Business Saturday or Sunday at 10 a.m. or 11:30 a.m. ET. This week, energy analyst Tom Kloza of OPIS on what to expect at the gasoline pump and in your winter heating bill. Plus, a look at Nvidia's rough week and what to watch as Apple is expected to unveil new iPhones. 

DJIA: -1.07% to 31,318.44
S&P 500: -1.07% to 3,924.26
Nasdaq: -1.31% to 11,630.86

The Hot Stock: CF Industries +4.3%
The Biggest Loser: DISH Network -4.5%  

Best Sector: Energy +1.8%
Worst Sector: Communication Services -1.9%