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Wall Street will navigate a key August jobs report, more inflation data and the final throes of the second quarter earnings season this week as markets brace for what has traditionally been the toughest month of the investor calendar since the Second World War. 

With Federal Reserve Chairman Jerome Powell using his Jackson Hole pulpit to warn markets that a hot U.S. economy will likely require ‘higher for longer’ interest rates to keep inflation in check, investor focus is likely to shift to Thursday’s August reading of the Fed’s preferred gauge, the PCE Price index, as well as Friday’s August jobs report for clues as to how price pressures are developing.

Jobs and wages may prove crucial pieces to the Fed’s inflation puzzle, particularly in the wake of a pay deal agreed between package delivery giant United Postal Service UPS and its unionize workers and the threat of a strike by the United Autoworkers Union following a Friday vote by its ‘Big Three’ membership.

Economists a re looking for a net gain of 186,000 new jobs over the month of August, with average hourly earnings rising 0.3% on the month and the headline unemployment rate holding at a five-decade low of 3.5%. 

Prior to Friday’s jobs data, payroll processing group ADP will publish its National Employment report at 8:15 am on Wednesday, with the Labor Department following-up with weekly jobless claims data at 8:30 am Eastern time on Thursday.

The Bureau of Labor Statistics will publish its job job openings and labor turnover survey, also called the JOLTS report, for the month of July at 10:00 am Eastern time Tuesday.

On the earnings front, around 12 S&P 500 companies are slated to publish second quarter profit updates this week as the overall reporting season draws to a close, including client software group Salesforce CRM after the close on Wednesday and chipmaker Broadcom AVGO after the bell on Thursday. 

With around 485 S&P 500 companies reporting so far, collective profits are forecast to fall just 0.3% from last year to a share-weighted $451 billion. That figure is likely to rebound to a 1.9% gain over the three months ending in September, according to Refinitv data. 

Markets will likely need the extra support heading into the month, in fact, as CFRA data suggests September has been the toughest for stocks on record, falling an average of 0.7% in every year since 1945.

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