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Friday's August Jobs Reports

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Jerome Powell threw cold water on those hopes last week when he said the central bank won't stop increasing interest rates anytime soon, triggering a selloff that erased $78 billion from the richest Americans' fortunes in just one day.

That wasn't an accident: Minneapolis Fed President Neel Kashkari said in an interview with Bloomberg's Odd Lots podcast Monday that he was "happy" to see how Powell's speech was received.

As of Wednesday's close, stocks had dropped 8% from their mid-August high.

Now, any data showing the US economy is still strong may be taken negatively by the stock market since it could lead to more aggressive rate hikes — a "good news is bad news" mindset, said Brian Overby, senior markets strategist at Ally Invest.

"Worse-than-expected data might mean the Fed could ease off the tightening gas pedal," he said.

Meanwhile, it's clear the hot pandemic housing market is beginning to cool new home sales recently tumbled to the slowest pace since 2016 and home price growth decelerated in June.

But economists at Goldman Sachs Group Inc. say the housing downturn still has further to go.

Next up, all eyes will be on the jobs reports for August, scheduled to come out Friday. It's projected to show 300,000 jobs added — still a healthy pace but a moderation from July's 528,000 surprise while the unemployment rate is likely to hold steady at a five-decade low of 3.5%.

Any positive surprises could trigger another selloff, according to Fiona Cincotta, senior financial market analyst at City Index.

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Written by Claire Ballentine for Bloomberg

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