162,000 reasons the Fed might hike 💼

Welcome back to the Day Trading newsletter 📈

Thursday was the best day in a month for stocks after a Fed governor said "give disinflation a chance."

Friday morning, the jobs report showed up with nearly triple the hiring anyone expected, and in this market, good news for workers is bad news for rate cuts.

Let’s get into it 👇️ 

🚖 Tesla fell 6% Friday after its Cybercab launch underwhelmed Wall Street. Thursday's Austin event was invite-only, wasn't streamed, and Elon Musk didn't show. Analysts say pricing, production pace and regulatory approval are all still open questions, and NHTSA opened an audit into whether Tesla properly self-certified the two-seat, steering-wheel-free robotaxi.

👕 Lululemon shares plunged about 18% after the company cut its full-year outlook for the second time. Second-quarter revenue slipped to $2.42 billion, missing estimates, and the third-quarter forecast of 93 to 98 cents a share landed miles below the $2.40 Wall Street wanted. Incoming CEO Heidi O'Neill inherits the mess on Sept. 8.

💰️ Nvidia agreed to buy open-source AI platform Hugging Face for $12.9 billion, its second-biggest deal ever. Hugging Face CEO Clément Delangue says his company approached Jensen Huang over the summer. Nvidia says the platform will stay open to the whole AI ecosystem. The deal trails only Nvidia's $20 billion Groq purchase in December.

🤑 Broadcom beat on earnings and revenue, then slid roughly 6% Thursday because its forecast wasn't big enough. Revenue grew 86% to $29.59 billion and net income more than tripled to $13.09 billion, but fourth-quarter guidance of $34.8 billion came in under the $35.03 billion analysts wanted. CEO Hock Tan says AI revenue doubles to $115 billion next fiscal year.

⛽️ Diesel hit a record $5.85 a gallon Friday as the Iran and Ukraine wars knock out refining capacity. That's nearly 60% above the $3.71 truckers paid a year ago, and California is at $7.70. Diesel moves nearly everything you buy, so the cost shows up as shipping fees and higher prices on store shelves — one more reason the Fed's inflation fight isn't over.

🚘️ Volkswagen jumped more than 6% after its board approved cutting another 50,000 jobs, taking total planned cuts to 100,000. The "Future Plan 2030" is the biggest overhaul in VW's 89-year history, halving the model lineup by 2035 and weighing alternative uses for four German plants. U.S. tariffs on its European cars went from 2.5% to 15% in two years, and Chinese rivals are eating its EV share; the stock is still down 21% this year.

🏡 The 30-year fixed mortgage rate climbed to 6.71% this week, its highest in more than a year. Freddie Mac's average rose from 6.66% a week ago and 6.50% a year earlier, tracking the 10-year Treasury yield's surge toward 4.8%. Vice President JD Vance used Thursday's White House briefing to push the Fed to cut so Americans can afford a home.

The U.S. economy added 162,000 jobs in August, the strongest month since March and nearly triple the 53,000 economists expected.

Unemployment held at 4.1%, and June and July were revised up by a combined 55,000 — July flipped from a 23,000-job loss to a 21,000 gain. Hiring was broad: restaurants and bars added 59,000, government education 42,000, manufacturing 16,000. Wages rose 3.1% from a year ago, a touch above forecasts but still below inflation, which ran at 3.7% in July.

Normally a hiring boom is cause for celebration. But the Fed has been debating whether to raise rates for the first time since 2023 to squash inflation that's been above target for five and a half years, and a hot labor market gives the hawks cover.

Traders reacted instantly: the 2-year Treasury yield, the one most sensitive to Fed policy, jumped to its highest since January 2025, and the Dow dropped roughly 300 points intraday, giving back a chunk of Thursday's 624-point rally.

Odds of a quarter-point hike at the Sept. 15-16 meeting climbed back to roughly 58-60% per CME FedWatch, a day after Governor Christopher Waller had pushed them down to a coin flip by saying he'd rather "wait one meeting."

President Trump, meanwhile, called it a "great jobs number" and demanded a rate cut — threatening to cut off trade with any country the U.S. runs a deficit with (that's more than 90 of them) unless the Fed complies.

What to watch: 

• Next week decides it. The producer price index lands Thursday and consumer prices Friday, and Waller, Williams and Barr have all said a hold depends on inflation "moderating" in that data.

• If CPI cools, the Fed can wave the jobs report through as strength, not overheating.

• If it comes in hot, the September hike moves from possible to probable — and the bond market, already at multi-decade-high yields around the world, has to price a Fed that's tightening while oil sits near $95.

 RATE TODAY’S EDITION

⚠️ Disclaimer: Not financial advice. Do your research before making any trades.