Market Close: Stocks Lower, Fuel Prices Surge, Inflation Data Ahead • 9/4/26

0:00The CNBC Business News Update Market Close. I'm Jessica Ettinger. Wall Street opens Tuesday morning after the Labor Day holiday with a mixed week in the rear view for the major averages. On Friday, stocks fell after a stronger than expected jobs report that pushed yields up the two-year Treasury note at its highest since last year. On Friday, the Dow down 271 points led lower by shares of Apple, which were down two and a half percent. The S &P 500 index fell 29 points. The Nasdaq was down 77 points. For the week, the S &P 500 index and the Nasdaq each eked out slight gains. Inflation is in focus in the coming week.

0:41We get the PPI producer price index for August coming Thursday. The big CPI consumer price index comes Friday. And that data are what Fed members are waiting for to try to decide whether they're going to raise interest rates. CNBC's Kelly Evans in Wells Fargo, Chief Economist Tom Porcelli on Fed Chair Kevin Warsh's predicament. If you're trying to sell the idea that you are willing to make a decision to hike rates, right, which is what Warsh is basically trying to drive home to the market, then that means that if the data move against you, you're going to actually have to hike. Again, I don't love the idea that it's all about this singular report, but I think that's the corner that Warsh has painted himself in.

1:21So in other words, you do think it comes down to what happens with CPI and PPI next week? I do. I stress, I don't think monetary policy should be crafted that way, but this is where we are. And inflation is front and center for Americans who've never paid this much at the pump ever for gas over a Labor Day holiday weekend. A record high$4.15 for a gallon of regular, according to AAA. And for trucks, ships, trains and ag equipment, diesel is at an all-time high of$5.85 a gallon. Everything related to transportation can be impacted by diesel prices, consumer goods, agriculture. The real problem on diesel is the lack of spare capacity when it comes to refineries.

2:01U.S. refineries are running at 98 % utilization rates. That's RBC's Halima Croft on CNBC, and she explains why. The war with Iran, a number of refineries in the Middle East have been targeted. We're not getting product out of the Strait of Hormuz. Ukraine continues to target Russian refineries. So we're facing a refinery shortage in terms of spare capacity, and that's profoundly impacting diesel prices. And MAI Capital's Chris Crizanti with this note. Diesel is closely related to heating fuel. And as we get towards the midterm elections, it gets colder as November comes. And so all of a sudden, folks are going to get their first heating bill this season, and it's going to be shockingly high.

2:44The August jobs report came in strong 162 ,000 jobs created last month after very soft hiring in June and July. So where were the bulk of August jobs created? Leisure and hospitality and schools. Two-thirds of the gains are restaurants and local education. Solid labor market or at least one that is steady is the way we can characterize this. That's CNBC's Mike Santoli and Carl Quintanilla. The Brookings Institution's Wendy Edelberg tells CNBC she thinks the August jobs number might get revised lower. I am very puzzled actually by the strength in the payroll numbers. So at 71 ,000 on average for the last three months, that's like seven times faster than the pace of job growth last year.

3:31I see nothing else in the labor market that suggests that kind of pickup in activity. On the coming week's watch list, As we mentioned, it's all about the latest inflation numbers Thursday and Friday. The NFL season kicks off Wednesday night, Friday. The nation remembers the September 11th terrorist attacks 25 years ago. On Monday, the financial markets are closed for the Labor Day holiday. Jessica Ettinger, CNBC. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S.

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