Key Takeaways
- U.S. hiring rebounded sharply in August with 162,000 nonfarm payrolls added, more than doubling economist forecasts of 65,000.
- U.S. diesel prices hit a record $5.85 per gallon as the ongoing conflict with Iran continues to disrupt global fuel supplies and refinery operations.
- Fitch Ratings upgraded Portugal to ‘A+’ with a stable outlook, citing strengthened public finances and a projected decline in government debt.
- S&P Dow Jones Indices announced a major rebalance, with Bloom Energy (BE), Illumina (ILMN), and Everpure (P) joining the S&P 500 effective September 21.
- The U.S. State Department approved $5.75 billion in arms sales to Saudi Arabia, benefiting major defense contractors including Boeing (BA) and Honeywell (HON).
U.S. Labor Market Defies Expectations
The U.S. economy added 162,000 jobs in August, a significant acceleration from July's sluggish figures and well above the 65,000 consensus estimate. Despite the hiring surge, the unemployment rate remained steady at 4.1%. Gains were led by the Leisure and Hospitality sector (+62,000) and Local Government Education (+42,000), while the Information and Financial sectors saw modest losses.
Analysts noted that while the headline figure is strong, the three-month average of 71,000 monthly jobs suggests a cooling trend compared to previous years. The robust data may provide the Federal Reserve with more leeway to maintain or even raise interest rates if inflation remains sticky, particularly given the new pressures in the energy market.
Energy Crisis: Diesel Hits All-Time High
U.S. diesel prices reached a record national average of $5.85 per gallon on Friday, according to AAA. This represents a 60% increase from a year ago, driven primarily by the six-month-old war with Iran which has crippled exports through the Strait of Hormuz. The surge is expected to place immense pressure on logistics, agriculture, and manufacturing sectors that rely on diesel for transport.
The divergence between gasoline ($4.18/gal) and diesel is widening due to Middle Eastern refinery damage and increased U.S. exports to global markets. President Trump has characterized the conflict as "intermittent" and "small potatoes," even as he threatened new strikes on Iran’s fortified Pickaxe Mountain nuclear site "very soon."
Sovereign Ratings: Portugal Upgraded, Qatar Stabilized
Fitch Ratings raised Portugal’s sovereign credit rating to ‘A+’ from ‘A’, highlighting a "strong political commitment to fiscal prudence." The agency expects Portugal’s debt-to-GDP ratio to fall to 87% in 2026 and reach 82.9% by 2028. The upgrade reflects a general government surplus and institutional strengths bolstered by Eurozone membership.
In the Middle East, Fitch affirmed Qatar at ‘AA’ but removed the sovereign from Rating Watch Negative (RWN). While the outlook remains Negative due to the Iran war's impact on LNG exports, Fitch noted that the risk of further "major facility damage" has diminished since March. Qatar's economy is expected to contract by 18.8% in 2026 before a sharp rebound in 2027.
Corporate and Index Developments
S&P Dow Jones Indices announced its quarterly rebalance, effective September 21. Bloom Energy (BE), Illumina (ILMN), and Everpure (P) will join the S&P 500, replacing Molson Coors, The Trade Desk, and Builders FirstSource. In the S&P 100, high-profile exits include Nike (NKE) and Colgate-Palmolive (CL), making room for tech leaders like Dell Technologies (DELL) and Palo Alto Networks (PANW).
In the defense sector, the U.S. approved a $5.75 billion weapons package for Saudi Arabia. The deal includes $5 billion for Joint Direct Attack Munitions (JDAMs) from Boeing (BA) and $750 million for tank engines from Honeywell (HON). The sale is intended to bolster Saudi Arabia's defense against regional threats amid the heightening tensions between Washington and Tehran.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.