Inflation’s Shadow. A strong jobs report hits differently when investors are worried about inflation. Today, rather than seeing the good news built into the 162,000 jobs added in August, investors viewed the data through the lens of a hot economy, the Federal Reserve, and the next move for interest rates.

So, as unemployment remained stable at 4.1%, the odds of an interest-rate hike in a few weeks ended the day almost 10 points higher, at 58%. In other words, there’s now a three-in-five chance that the Federal Open Market Committee increases rates by a quarter point when it next meets from Sept. 15 to 16.

“This report leaves inflation as the primary focus of the Fed’s September decision,” Jason Pride, chief of investment strategy and research at Glenmede, said today. “A labor market adding workers at this pace, with layoffs contained and participation recovering, gives the committee no reason to unfix its focus from the price stability side of its mandate.”

As investors priced in the likelihood of higher rates, stocks fell. The S&P 500 ended the day down 0.4%, while the tech-heavy Nasdaq Composite was off 0.3% despite a strong day for the usually influential chip sector.

All attention now turns to next Friday’s consumer price index report, which is likely to hold major sway with the Fed. The chance for a cooler-than-expected CPI report might explain why stocks were down just modestly today.

Watch our TV show on Fox Business Fridays at 7:30 p.m. ET and Saturdays and Sundays at 9:30 a.m. or 10:30 a.m. ET. This week, Creative Planning’s Peter Mallouk on his stock market bet with Mark Cuban and how to invest in a new world for bonds.

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The Hot Stock: Sandisk +11.9%
The Biggest Loser: Lululemon Athletica -17.4%

Best Sector: Industrials +0.4%
Worst Sector: Consumer Discretionary -1.3%

Next week’s holiday-shortened trading brings one of the most consequential economic data releases in years. The Bureau of Labor Statistics’ consumer price index release on Friday could be the swing factor for the Federal Open Market Committee when it sets interest-rate policy at its Sept. 15-16 meeting.

On Thursday, the BLS releases the producer price index, a day before the CPI.

Six S&P 500 companies report earnings next week including two software giants, Adobe and Oracle, which announce results on Thursday. They’ll look to keep the software renaissance going as the companies try to rebound from the so-called SaaSpocalypse. The iShares Expanded Tech-Software Sector exchanged-traded fund is up 15% since the beginning of July versus a 18% decline for the PHLX Semiconductor Sector Index. That’s a reversal from the first half of the year, when the semiconductor index outperformed software stocks by a whopping 115 percentage points.

• Nvidia Is Acting Like an Underdog. OpenAI and Anthropic Should Be Worried.

• A Start-Up Called Nothing Has Raised $450 Million. It’s Coming for the iPhone.

• Adobe’s New CEO Is an Inside Hire. Wall Street Isn’t Pleased.

• Up and Down Wall Street: What We’ve Learned Since 9/11

• And this weekend’s Barron’s cover story: The Death of the Safe Haven: How to Fix Your Bond Strategy as Yields Rise

Join Barron’s Live returns on Monday at noon. Barron’s Lauren R. Rublin speaks with Roger Hallam, global head of rates at Vanguard, on the outlook for financial markets, industry sectors, and individual stocks.

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