Strong August Jobs Report Is a Bright Spot for the Economy

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Alex Ossola (0:34)

A hotter than expected jobs report sends stocks lower as traders bet on a rate hike from the Fed. Plus, federal regulators are investigating Tesla's CyberCab, which launched on the streets of Austin yesterday.

Ryan Felton (0:46)

The standards were developed decades ago and obviously were not thought of to consider something like a vehicle without a steering wheel or pedals.

Alex Ossola (0:55)

And Democrats are criticizing John Fetterman after the Wall Street Journal reported that he showed little interest in his duties as a senator. It's Friday, September 4th. I'm Alex Ossola for the Wall Street Journal. This is the PM Edition of What's News, the top headlines and business stories that move the world today.

The US economy added 162,000 jobs last month, much stronger than economists were expecting. The new report from the Labor Department shows that some of the jobs were from a rebound in the restaurant and education sectors, which economists considered more of a one-off. But the job gains were broad, and the US has added more jobs each month on average than it did last year, suggesting that the labor market is stronger than it was earlier this summer.

Journal Markets reporter Jack Pitcher says this data removes an obstacle for the Federal Reserve, which is expected to choose between raising rates or holding them steady later this month.

Jack Pitcher (1:51)

Today is a little bit of what we sometimes call a good news is bad news day. For the economy, today's jobs report showed strength. But the market's reaction is stock selling off. Not a lot, but things are broadly in the red.

That's in reaction to this idea that today's report opened the door for a rate hike later this month, which oftentimes can slow things down and hurt the stock market. People are really focused on the Fed's upcoming meeting. The new Fed Chair, Kevin Warsh, is focused on getting inflation back closer to the Fed's target. And the jobs report was an important data piece, especially if it came in weak.

That would make it harder for the central bank to raise rates. What we got today definitely helps open the door for Warsh to raise interest rates in a few weeks.

Alex Ossola (2:41)

As Jack mentioned, major US indexes fell today, with the Dow leading the losses and dropping half a percent. After an initial jump in US treasury yields, only shorter-term treasuries remained higher at market close. And diesel prices hit a new all-time high of $5.85 a gallon today, a reminder of the inflation pressure facing the Fed.

The stocks of the companies that create your credit score tumbled today, after the Trump administration's housing chief said they've been overcharging Americans. Bill Poulty said he was giving Fannie Mae and Freddie Mac the authority to accept mortgages backed by scores from start-up Vantage Score. Shares of Fair Isaac, the company behind the main FICO credit score, fell almost 17 percent, while those of Equifax and Experian, two companies that distribute the score, dropped about 6 percent and 4 percent respectively.

Today, federal regulators said that they have opened an investigation into Tesla and its new robotaxi, the Cybercab, which doesn't have a steering wheel, mirrors or pedals. It launched yesterday in Austin, Texas. The National Highway Traffic Safety Administration is looking into whether the car's design puts it in conflict with federal safety standards. Tesla told the regulator that the Cybercab meets, quote, all applicable standards. Journal Autos reporter Ryan Felton says that part of the issue is a mismatch between the standards and the current state of technology.

Ryan Felton (4:07)

The standards were developed decades ago and obviously were not thought of to consider something like a vehicle without a steering wheel or pedals. The sort of distinction here is if you can show that the vehicle is going to provide a sufficient level of safety as the car that is compliant, then you can apply for an exemption to some of these standards.

So, Tesla is basically saying our vehicle is meeting all of the relevant safety standards and that's why we're starting operations of Cybercabs.

Alex Ossola (4:41)

Becky Peterson, who has covered Tesla for the Journal, says the Cybercab is central to Elon Musk's vision for Tesla. But at the moment, the investigation is more of a speed bump than a roadblock.