Dear trader, dear stock market friends,
The Dow Jones Industrial Average has performed well in recent weeks. The index has been on a strong upward trend since the spring and yesterday marked a new all-time high of 45,711 points (on a closing price basis).
Last week, the focus was on the weak US labor market data, which on the one hand caused fears of an economic slowdown to return, but on the other hand raised expectations that the Fed would soon cut interest rates.
Significant slowdown on the US labor market
The US labor market report (Non-Farm Payrolls) for the month of August published last Friday (September 5) indicates a significant slowdown in the US labor market. Only 22,000 new jobs were created, far fewer than the expected 75,000, continuing the slowdown of previous months: Less than 80,000 jobs were already created in July, and the number of jobs for June was even subsequently revised into negative territory (-13,000 instead of +14,000 previously). For the first time since December 2020, the US economy recorded a monthly decline in employment. At the same time, the unemployment rate rose from 4.2 % to 4.3 %, reaching its highest level since October 2021.
It is worth noting that the hiring freeze is being felt almost across all sectors. In August, most sectors lost jobs on balance, with notable increases only in sub-sectors such as education/health (+46,000) and leisure and hospitality (+28,000). Company surveys indicate that many companies have put their personnel planning on hold in the face of rising costs, not least because customs duties and other cost increases are putting pressure on budgets. Although there were no mass redundancies, the job market has practically come to a standstill.
The significant slowdown in the labor market marks a stark contrast to the situation at the beginning of the year. At that time, US unemployment was stable at 4 % and six-figure job growth was reported month after month.
Immediately after the publication of the latest NFP figures, the financial markets reacted with significant movements: Bonds rose, yields on the 10-year US government bond fell at times to their lowest level in five months (around 4.06 %) and the US dollar came under downward pressure. A significantly weaker labor market is fueling hopes that the Federal Reserve will now take countermeasures sooner and loosen the monetary reins.
Up to three interest rate cuts possible in 2025
In fact, expectations of the US Federal Reserve have changed dramatically in recent weeks. As recently as July, Fed Chairman Jerome Powell emphasized that, with a key interest rate of 4.25 - 4.50 %, the Fed wanted to wait and see, depending on the data, and left further steps open. The hesitant stance was due to persistently high inflation (most recently around 2.5 - 3 %, fueled by new import tariffs) and the previously robust labour market. The Fed had left the key interest rate unchanged since the last rate cut in December 2024 and had not given in to pressure from the White House. However, the situation has now changed. Although inflation is still at a higher level in the long term, the Fed has a dual mandate and must take the situation on the labor market into account alongside inflation.
According to the CME Group's FedWatch tool, a rate cut at the upcoming meeting on September 17 is a foregone conclusion. By the end of the year, the most likely scenario is that each of the three remaining meetings will see an interest rate cut and that we will see interest rates at 3.50 - 3.75 % by the end of the year.
However, inflation data remains important. If inflation continues to run hot, this would put the Fed in a real dilemma: The labor market demands rapid interest rate cuts, but at the same time rising inflation would argue against interest rate cuts.
Dow Jones Index consolidates sideways
After the S&P 500 and the Nasdaq 100, the Dow Jones Industrial Average also made the leap to a new all-time high in August, followed by a short-term sideways consolidation. It is remarkable that the Dow has been able to hold up comparatively well despite the weak labour market data and seasonal weakness, which once again underlines the strong momentum of the current bull market.
Winners and losers in the Dow Jones
Of the 30 stocks in the Dow Jones, 23 are up this year, while 7 are in the red. The list of winners is currently led by traditional industrial and financial stocks.
- Goldman Sachs led the list of winners with a gain of over 35 %: The successful trading business and the prospect of interest rate cuts in the near future provided a tailwind.
- As an aircraft manufacturer, Boeing has benefited from the recovery in the aviation sector and has seen its share price rise by around % to date.
- Defensive quality stocks such as Johnson & Johnson (+25 %) are also clearly in the green.
- Like many tech stocks, software giant Microsoft (+19 %) rode the AI wave and impressed with solid cloud figures.
- The Nvidia share, which was added to the Dow Jones in 2024, also recorded double-digit gains thanks to the AI boom (approx. +27 % YTD)
- Among the losers in the Dow Jones, UnitedHealth Group has come under the most pressure this year. The shares of the largest US health insurer have fallen by 40 % at times in 2025 and are currently down around 30 % on a YTD basis. The reasons for this are sharply increased costs and insurance benefits as well as investigations by the US Department of Justice against UnitedHealth due to possible excessive billing. In addition, the surprising resignation of the CEO in May caused uncertainty. Although UnitedHealth is now considered favorably valued with a price/earnings ratio of around 12, the large number of construction sites has caused many investors to flee.
- Salesforce, the provider of business software, is also one of the laggards. The former high-flyer has lost around a quarter of its stock market value. The background to this is a noticeable decline in growth: Salesforce is only expecting an increase in turnover of 7 - 8 % for the current year, after years of growth of 20 % and more. Analysts see the company in a kind of maturity phase in which the best times could be over for the time being.
- With a decline of just over 13 %, the healthcare company Merck & Co is also among the losers, particularly due to patent and sales concerns.
- Even Apple - until recently the most valuable company in the world - is still trading slightly below its level at the start of the year (-6 %) despite a strong recovery rally in August.
Author: Tobias Schmid
Date: 10.09.2025
