Job Market Cracks? Fed Pivot Bets Explode as Tesla Surges

Traders are on high alert ahead of Friday's payroll data, as signs mount that the US labor market is finally cracking. Initial jobless claims just hit their highest level since June. ADP's private payrolls print? A meager 54,000. And hiring plans in August, according to Challenger, Gray & Christmas, came in at their weakest levels on record for the month. The market's read: employers are backing off, and the Federal Reserve may be forced to respond. Expectations are coalescing around one of the softest jobs reports since the pandemic, with economists penciling in just 75,000 payroll gains and unemployment ticking up to 4.3%.

Bond traders aren't waiting. Yields have plunged across the curve, and futures now price in a near-lock for a rate cut by the September meeting. At least two more could follow in 2025. Equities are already moving in anticipation, with Tesla TSLA and other rate-sensitive names climbing on hopes of cheaper capital. If Friday's data confirms a fourth straight month of sub-100,000 job gainsa streak not seen since 2020it could be the green light for the Fed to shift from pause to pivot. The market narrative is no longer about inflation. It's about fragility.

Still, the path ahead isn't risk-free. Will Compernolle at FHN Financial warns that continued labor softness could tip firms from hiring freezes into outright layoffs. Jamie Cox at Harris Financial Group suggests Powell may soon have no choice but to ease. And Chris Larkin at E-Trade throws in a caution flag: slowing job growth may be bullish for now, but if the trend deepens, recession talk could resurface fast. The stakes for Friday's report couldn't be higherit's not just a print, it's a policy trigger.