Wall Street appears to be grappling with what the mixed August jobs data means exactly for markets. Stocks dropped Friday, with the S & P 500 posting its worst week of the year after the nonfarm payrolls report came in with both good and bad news. On one hand, the unemployment number eased slightly. On the other, the headline jobs number missed expectations. Additionally, jobs growth for the previous two months saw significant downward revisions. One thing, however, was made clear to some investors by this latest jobs report: The labor market — and by extension the economy — is cooling. “The lower unemployment number versus the downward revisions presents a quandary given the pattern of downward revisions indicating more serious economic conditions becoming entrenched,” wrote Quincy Krosby, chief global strategist at LPL Financial. .SPX 5D mountain S & P 500 On Friday, the S & P 500 and Nasdaq Composite registered losing weeks, down by more than 4% and 5%, respectively. The Dow Jones Industrial Average ended the week with a more than 2% decline. ‘Uncomfortably close to the ground’ Rob Williams, chief investment strategist at Sage Advisory, thinks the Fed will avoid a hard landing, but he said a cooling in the economy has him diversifying his equity allocation. Instead of the market-cap weighted S & P 500, where a few high-flying tech stocks are dominating, he would prefer to broaden his exposure to health care and financials, sticking to quality companies that can weather any economic softness. “I think we’re not going to get a hard landing, but we’re not going to get a no landing — and that’s kind of what the equity market thinks. I think we’re going to get uncomfortably close to the ground, meaning that we’re going to have some sub-1.5% GDP quarters, and that’s going to worry some people,” Williams said. “And given where [price-to-earnings multiples] are, they’re a little more vulnerable.” He favors the bond market over equities here. Williams said that, what’s clear is that the Fed will lower rates meaningfully from where they were over the coming months, a likelihood that has him optimistic on Treasurys over the next six to 12 months. “People forget it’s not whether they cut 50 or 25 [basis points], it’s where we’re heading in the next year and a half in the bond market, and Fed funds is probably heading toward 3%,” Williams said. “So that’s the more important number because that means rates are going down, and if you have more bonds you’re locking in higher yields now and you get to participate in that.” Treasury yields fell Friday following the August jobs report, with the 10-year Treasury yield a little lower at 3.71%. Yields move inversely to prices. CPI, PPI The Fed next week will head into the blackout period before their policy meeting on Sept. 17-18. That said, two key inflation reports next week could inform what the central bank’s next policy move will be. The August consumer and producer prices reports — due out Wednesday and Thursday, respectively — are expected to show the trend of easing inflation remaining intact. Yet any indication of a shift in the narrative has the potential to roil equities. “We just need to avoid any any negative surprises,” said John Belton, portfolio manager at Gabelli Funds. CPI is expected to have eased to 2.6% on a yearly basis last month, per FactSet. That would be down from a 2.9% increase in July. Core CPI, which strips out volatile food and energy prices, is expected to have remained unchanged at 3.2%. PPI is similarly anticipated to have fallen to 1.7% from 2.2%, economists polled by FactSet predict. Next week will also bring the first presidential debate between Vice President Kamala Harris and former President Donald Trump, an event traders will closely watch as the candidates outline their economic policies. Apple will also have its “It’s Glowtime” event where the tech giant is anticipated to launch its iPhone 16. Investors in the world’s largest public company are hoping for fresh details into Apple’s artificial intelligence endeavor, called “Apple Intelligence.” Analysts, however, are cool on the stock. Week ahead calendar All times ET. Monday Sept. 9 10 a.m. Wholesale Inventories final (July) 3 p.m. Consumer Credit (July) Earnings: Oracle Apple’s “It’s Glowtime” event Tuesday Sept. 10 6 a.m. NFIB Small Business Index (August) Goldman Sachs’ Communicopia and Tech Conference U.S. presidential debate Wednesday Sept. 11 8:30 a.m. Consumer Price Index (August) 8:30 a.m. Hourly Earnings final (August) 8:30 a.m. Average Workweek final (August) Thursday Sept. 12 8:30 a.m. Continuing Jobless Claims (08/31) 8:30 a.m. Initial Claims (09/07) 8:30 a.m. Producer Price Index (August) 2 p.m. Treasury Budget (August) Earnings: Adobe , Kroger Friday Sept. 13 8:30 a.m. Export Price Index (August) 8:30 a.m. Import Price Index (August) 10 a.m. Michigan Sentiment preliminary (September)