by Louis Navellier
September 9, 2026
Going into Friday’s jobs report, investors were worried. Wednesday’s private-payroll ADP report said only 38,000 private sector jobs were created in August, the smallest monthly increase since January and significantly below the economists’ estimate of 47,000 jobs. Education and healthcare created nearly all (45,000) of new August jobs, followed by leisure and hospitality. The most shocking detail in the ADP report was that manufacturing lost 17,000 jobs. ADP’s chief economist, Nela Richardson, said the labor market is characterized by “choppy hiring,” so most investors were nervous about Friday’s jobs report.
However, the Labor Department pleased the market by announcing a whopping 162,000 new payroll jobs in August, well above the economists’ consensus estimate of 55,000. Also, the Labor Department revised its July job total up by 44,000, from a previous report of 23,000 fewer jobs to a gain of 21,000 jobs.
The unemployment rate remained unchanged at 4.1%. Average hourly earnings rose 0.3% (10 cents an hour) to $37.75 per hour, while rising 3.1% in the past 12-months. Treasury yields rose in the wake of this better-than-expected August payroll report, plus past upward revisions, so the Fed could raise rates soon.
Last Tuesday, the Institute of Supply Management (ISM) confirmed ADP’s bad news in manufacturing jobs by reporting its manufacturing index falling to 54.6 in August, down from 55.6 in July. Since any reading over 50-signals an expansion, manufacturing is still very healthy, but the other components were worrisome: The “new orders” component slipped to 53.7 in August, down from 56.7 in July, while “order backlogs” dropped to 51.8 in August, down from 55 in July. These components (new orders and order backlogs) were largely responsible for most of the deceleration in the overall ISM manufacturing index, even though 15 of the 17-manufacturing industries surveyed by ISM reported expanding in August.
Then, on Thursday, ISM reported its non-manufacturing (service) index rose to 55.4 in August, up from 54.1 in July. All components were healthy, as business activity surged to 61.7 in August, up from 59.1 in July, while the new orders component soared to 60.9 in August, up from 57.1 in July. There is also a growing order backlog, since the inventories component surged to 56.7 in August, up from 51.4 in July.
Interestingly, the employment component contracted (below 50) for the second month in a row, at 47.8 in August, vs. a similar 47.4 in July. Since any reading below 50 signals a contraction, the robust service sector is not creating many new jobs, which is likely due to big productivity gains. Also, just 12 of the 17 service industries surveyed reported expanding in August. In the wake of the combined ISM numbers, the Atlanta Fed’s 4.7% estimate for annualized GDP growth in the third quarter looks increasingly likely.
Can the Fed Torpedo This Market by Raising Key Rates Next Week?
The Federal Open Market Committee (FOMC) meets next week (September 15-16). After Friday’s strong jobs report, the betting market is now calling for a 60% to 66% chance of a 0.25% rate increase next week. Would that destroy this market right before an election? I don’t think so. There is a narrative out there predicting soaring global bond yields derailing the stock market, but that only pertains to interest-rate sensitive value stocks, especially dividend stocks. Besides, I would bet against the Fed increasing their key interest rate at the upcoming Federal Open Market Committee (FOMC) meeting next week.
One big reason is Fed Chairman Kevin Warsh saying at Jackson Hole that inflation isn’t meaningfully slowing, vowing to bring it down “at sufficient speed” to the Fed’s 2% goal, which he described as a “firm and fixed” target. Furthermore, Warsh said he believed the better course is to “await new information,” particularly given the “possible developments in supply chains, investment flows, and geopolitics … before deciding whether a change in interest rate policy was advisable.”
I was pleased to see the Fed Chairman also talk about the AI boom and the incredible productivity gains it is unleashing. Warsh said his new task forces at the Fed are studying the impact of AI and productivity gains on the U.S. economy, implying there is likely no negative impact (like rising inflation) with AI.
Before next week’s FOMC meeting, the major inflation indexes will come out later this week, with the CPI and PPI announcements. Additionally, worldwide demand for crude oil tends to decline after Labor Day, so there may be some energy price relief soon. I do not think the Fed should raise key interest rates at its next FOMC meeting, but I am in a minority with that opinion. Either way, let’s not worry about any Fed rate hike until after the CPI and PPI data emerge, so we can better analyze any future inflation risks.
Long-term, crude oil prices are headed lower, since President Trump recently announced the “biggest oil deal in world history,” saying the U.S. has secured majority control of more than 65 billion barrels of Venezuela’s proven oil reserves. Secretary of State Marco Rubio said, “This deal is a huge win for both the American and Venezuelan people. It demonstrates how President Trump’s bold foreign policy is driving America First wins, securing stable reserves and low-cost oil in our hemisphere and lowering gas prices here at home. For the Venezuelan people, this will bring nearly $100 billion in private investment, support thousands of high-paying jobs, and drive the reconstruction of Venezuela’s economy.”
As for any potential pre-election shocks, September is historically a weak month, partly due to investors having to raise capital for their estimated quarterly tax payments due September 15th, but the second half of September is usually stronger. We should also benefit from quarter-end window dressing, so if you have more capital to invest, the latter half of September would be a great time to add positions.
The G-20 Finance Ministers Squabble, Then Head Home Early
The G-20 finance ministers met in Asheville, North Carolina last week, but the meetings closed early on concerns about rising bond yields, spats over tariffs, public insults, and even some fighting over a group photo. Europe’s finance ministers were furious Russian Finance Minister Anton Siluanov was invited, and they did not want him in their group photo. (Russia has not been invited to the G-20 summit since it invaded Ukraine in 2022). German Finance Minister Lars Klingbeil told reporters, “The joint approach of the Europeans, for which I am also very grateful, ultimately led to this family photo taking place without the Russian finance minister, without the Russian delegation.” Traditionally, the G-20 finance ministers’ summit is designed to bring the top financial ministers together, to find a way navigate their joint financial challenges, but these G-20 finance ministers were so divided they were not able to release a joint statement. Obviously, with 20 countries vying for control, there are often differing opinions and factions.
As the 2026 federal fiscal year closes (on September 30), the annual deficit is projected to top $2 trillion. U.S. Treasury Secretary Scott Bessent said, “The world is awash in debt,” adding, “The only way for us to get out of this is to grow our way out of it.” Bessent thinks we can do that, saying, “The days of settling for subpar growth are over.” At the G-20 forum, Bessent had harsh words for Canada, saying it was impossible for them to engage in a tit-for-tat trade war with “someone who’s 13-times larger.”
Europe has a greater set of problems than America. The eurozone announced retail sales declined 0.6% in July, substantially below the economists’ consensus of a 0.3% increase in retail sales. Germany’s retail sales plunged 3.4% in July, while Spain’s retail sales dropped 0.9%. Spain was previously the hottest economy in the eurozone, so the outlook for economic growth in the eurozone has turned grimmer.
Looking at the challenges faced by other nations, the U.S. remains an oasis in the world, and America is largely immune to global conflict. The exception is California, which now must import at least 30% of its gasoline from India and South Korea, as local refineries continue to close due to the Golden State’s ban on diesel made from crude oil (California diesel is now largely made from soybeans), which makes refineries based in California less profitable. Fortunately, Phillips 66 is coming to the rescue and building a new pipeline from the Permian Basin to Phoenix. It will soon ship gasoline, diesel and other fuels to California. Specifically, Phoenix is hooked up to a pipeline to Los Angeles, so refined products should be able to be shipped to California in the next few years.
The Wall Street Journal published an article titled, “How the AI Investment Craze Is Keeping the Global Economy Afloat.” Much of the opposition to data centers is emanating from China, where over 200 bots generating anti-data center articles have been identified. Clearly China is worried the U.S. will win the AI race, so it is planting false stories. Unfortunately, politicians have naively run with an anti-data center narrative as well, which is unfortunate, since they are just sending economic growth to neighboring states. For instance, New York’s data center moratorium is sending data center business into Pennsylvania.
I mentioned Ciena’s earnings in the introduction. Here are some more details: Ciena said its latest quarterly revenue rose 36.9% to $1.67 billion vs. $1.22 billion in the same quarter a year ago. During the same period, the company’s earnings rose 423% to $266.2 million or $1.83 per share vs. $50.3 million or 35-cents per share. Excluding extraordinary items, Ciena’s operating earnings were $2.11 per share.
The analyst community expected revenue of $1.646 billion and operating earnings of $1.74 per share, so Ciena posted a 1.4% revenue surprise and 21.3% earnings surprise. Ciena initially gapped up in the wake of its strong results, but some investors sold off after comments made on its conference call. Ciena CEO Gary Smith said in a press-release: “AI continues to drive compounding waves of network investment. As the only pure-play optical systems and interconnects provider, Ciena’s unmatched combination of incumbency, technology innovation, and deep expertise gives us a powerful competitive edge.’’
As autumn arrives and the weather cools, I expect the stock market to heat up, since another round of record earnings will start to be announced in mid-October. Also, the Anthropic IPO will likely get investors excited and refocus attention on AI-related stocks. The phenomenal earnings environment we are now enjoying cannot be ignored, and the prospect of the strongest GDP growth in decades should also help to boost investor sentiment!
Navellier & Associates; own Ciena Corporation (CIEN) in managed accounts. Louis Navellier and his family own Ciena Corporation (CIEN) via a Navellier managed account.
All content above represents the opinion of Louis Navellier of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
Friday’s Jobs Report and Other Indicators Look Strong
Income Mail by Bryan Perry
The Opponents of Data Centers Just Don’t Get It
Growth Mail by Gary Alexander
What Happened to America’s Work Ethic?
Global Mail by Ivan Martchev
The President is on a Collision Course with the Fed
Sector Spotlight by Jason Bodner
Applying Leverage to the Upcoming Elections
View Full Archive
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