Bonds, hot jobs report chip away at stocks

Wall Street had a volatile week as a bond sell-off tied to the Iran conflict and a stronger-than-expected jobs report, 162,000 jobs added versus forecasts of a third that, pushed the Dow down 146 points while the S&P and Nasdaq gained modestly. The strong jobs number gives Federal Reserve inflation hawks more ammunition ahead of the September 16 meeting, where many had expected rates to hold steady.

President Trump praised the jobs report, then demanded the Fed cut rates anyway, posting that the U.S. should have the world's lowest rate and threatening to 'stop trading with countries with which we have a deficit' if it doesn't happen. Economists doubt he'll get his wish given inflation concerns, oil price spikes following the U.S. strike on Iran, and worsening supply chain problems flagged in the latest manufacturing survey.

Government bond yields hit multi-decade highs this week, and diesel prices set a new record after the Iran strikes. The Fed's Beige Book had suggested most officials leaned toward holding rates steady, but analysts now say persistent above-target inflation is testing that patience.

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