Strong US Employment Data, Market Re-evaluating Fed Policy Path
On August 9, 2026, employment data for July released by the US Department of Labor showed that non-farm employment increased by 335,000, far exceeding the market expectation of 250,000, with the unemployment rate remaining at a low of 4.1%. Following the release of this strong employment data, market expectations for a Fed rate cut in September have significantly cooled, the dollar index has risen in response, US Treasury yields have climbed, and the US stock market has shown clear divergence. For Vietnamese investors, these changes mean the need to reassess their current US stock portfolios and adjust their August investment strategies.
Economic Signals Behind the Employment Data
US July employment data demonstrates strong resilience in the labor market. Not only did employment growth exceed expectations, but average hourly wages also increased by 0.3% month-on-month and 4.1% year-on-year, slightly above expectations. These data indicate that despite the Fed raising interest rates to a high of 5.25%-5.5%, the labor market remains active, and inflationary pressures may persist.
The head of the foreign exchange trading department at the State Bank of Vietnam stated: "The strong US employment data exceeded expectations, which will have a profound impact on global capital flows. For Vietnamese investors, this means the need to more carefully assess the risk exposure of US stock portfolios, especially during this critical period of global monetary policy shifts."
Market Reaction and Asset Price Changes
Following the release of the employment data, financial markets reacted quickly. The dollar index rose by 0.8% to 103.50, approaching a three-month high. The US 10-year Treasury yield rose to 4.3%, the highest level in two months. The US stock market showed clear divergence, with technology stocks generally falling while value stocks in finance, energy, and other sectors remained relatively resilient.
The Nasdaq index fell by 1.2%, while the Dow Jones Industrial Average fell only slightly by 0.3%, and the S&P 500 index fell by 0.7%. Among technology stocks, NVIDIA fell by 2.5%, Microsoft by 1.8%, and Apple by 1.2%, while traditional value stocks such as JPMorgan Chase rose by 0.8% and Chevron by 1.5%.
Re-evaluation of Fed Policy Path
The strong employment data has significantly cooled market expectations for a Fed rate cut in September. Before the data release, the market expected a 65% probability of a Fed rate cut in September, but after the data release, this probability has fallen below 30%. Most analysts now expect the Fed to likely keep rates unchanged until the end of the year, and may even raise rates further.
Federal Reserve Chair Powell stated at the subsequent press conference: "The strong employment data indicates that the labor market remains tight, and inflationary pressures may persist. We will continue to closely monitor inflation data and take further action if necessary." This statement was interpreted by the market as a hawkish signal, further reinforcing expectations that the Fed will maintain high interest rates.
Adjustments to US Stock Investment Strategies for Vietnamese Investors
For Vietnamese investors, changes in US employment data mean the need to reassess current US stock portfolios. Vietnamese financial analysts recommend investors make the following strategy adjustments:
