U.S. Stocks Retreat on Strong Jobs Report; Lululemon Plunges After Weak Guidance

U.S. stocks slipped Friday, September 4, 2026, as a surprisingly robust August jobs report lifted expectations for further Federal Reserve rate hikes, triggering a sell-off. The S&P 500 slipped 0.5%, the Dow Jones Industrial Average dropped about 378 points (roughly 0.7%), and the Nasdaq Composite edged down approximately 0.4% in morning trading. Treasury yields rose in response to the strong labor-market data. Tech stocks bucked the broader trend, with Nvidia gaining 1.9%, Micron surging 4.3%, and SanDisk jumping 8.7%, helping to dampen the overall market decline. 

Separately, Lululemon Athletica shares plunged 19.1% after the athletic apparel retailer reported quarterly revenue that fell short of analysts’ expectations and lowered its fiscal full-year outlook once again, weighing on investor sentiment. 

Labor Market Surprise Pushes Fed Hike Odds Higher

The Bureau of Labor Statistics revealed that U.S. employers added 162,000 jobs in August, sharply exceeding the consensus forecast of approximately 55,000 and far surpassing the prior month’s modest loss of 23,000 jobs. The unemployment rate held steady at 4.1%. The unexpectedly strong nonfarm payrolls reading heightened speculation that the Federal Reserve could raise interest rates when the FOMC meets later this month. As a result, Treasury yields moved higher, putting pressure on equities—particularly defensively oriented sectors. 

According to the Associated Press, “U.S. stocks fell … after the government reported that employers unexpectedly added 162,000 jobs last month … The surprise increase in hiring could give the Federal Reserve leeway to raise its benchmark short-term interest rate.” The S&P 500 fell 0.5%, the Dow dropped 378 points, and the Nasdaq declined 0.4% during Friday’s morning session. 

Lululemon’s Weak Revenue and Lowered Outlook Trigger Sharp Sell-off

In stark contrast to the market rally seen in some sectors, Lululemon Athletica shares tanked 19.1% after delivering a disappointing earnings report. The retailer’s revenue came in below analyst expectations, and management again revised down its full-year revenue guidance. This combination of weaker performance and reduced outlook rattled investors, triggering a steep sell-off in its stock. 

What Investors Should Watch Next

The job market’s resilience has reinvigorated concerns around inflation and rate policy—if labor strength persists, the Federal Reserve may opt for tighter policy for longer, potentially damping equity valuations further. In the days ahead, markets will closely follow the CPI and PPI data due ahead of the September FOMC meeting to assess whether inflationary pressures continue to cool or linger.

Meanwhile, Lululemon’s plunge highlights ongoing risks in consumer discretionary names, especially amid shifting consumer spending and retail demand. Investors may now scrutinize other retailers for similar trends, evaluating whether Lululemon’s outlook is an isolated issue or indicative of broader softness in the apparel sector.

With the S&P 500 down modestly and investor focus returning to economic data and guidance cues, markets approach next week’s releases with heightened sensitivity to inflation readings, Fed communication, and sector-specific earnings trends.