Stocks Brace for Volatility as Jobs Data Signals Economic Slowdown

As of September 5th, 2025, Wall Street is bracing for a week of volatility and uncertainty as it contends with the fallout from the latest jobs data. The nonfarm payrolls report has confirmed that the labor market has taken a turn for the worse, now in a clear downtrend.

This development has raised concerns about the broader economic outlook, with many investors anticipating a slowdown, if not a full-blown recession. The good news is that an interest rate cut is virtually guaranteed at the next Federal Reserve meeting, which is less than two weeks away. Some even speculate that a supersized rate cut could be on the table.

However, the bad news is that the economy appears to be weakening, and investors will have to grapple with the implications of that in the days ahead. If the recent spike in Treasury yields continues, it could start to weigh on the equity market as demand for bonds increases.

Amidst this uncertainty, analysts see a potential savior for the stock market in the form of artificial intelligence (AI). Evercore ISI's Julian Emanuel has set a lofty 2026 S&P 500 target of 7,750, underpinned by the secular growth story in AI. While there is a wide range between his bull and bear cases for next year, the strategist remains optimistic that dips should be bought in the current market.

As Wall Street navigates these crosscurrents, every piece of employment data will be heavily scrutinized, and the upcoming inflation data will also be closely watched. The market remains at a seasonally weak point, and the September Fed meeting, as well as the federal budget deadline, loom large on the horizon.