The market faces an "unusual" non-farm week: Will the Federal Reserve's personnel shake-up and the August employment report set the tone for a rate cut in September?

According to Zhitong Finance APP, in the coming week, American investors will face four trading days, along with a key non-farm payroll report—this is the first employment report since the significant revision of July employment data and the shocking personnel changes at the upper levels of the U.S. Bureau of Labor Statistics.

For investors, the importance of the August non-farm payroll report stems from its critical impact on Federal Reserve policy decisions. However, as of the end of this week, there remains great uncertainty regarding the final composition of the Federal Reserve Board.

Last week, Trump attempted to remove Federal Reserve Board member Cook from the board. Cook contested this decision, and the hearing held on Friday has left the appointment matter in a legal deadlock. Additionally, the Senate is scheduled to hold a hearing this week on Trump's nominated candidate to fill a temporary vacancy on the board.

In addition to the monthly non-farm payroll report, labor market data will remain the focus this week: the job openings report and ADP private sector employment growth data will be released on Wednesday and Thursday, respectively.

Key indicators for manufacturing and services will also make an appearance, marking the end of a busy week for economic data. In terms of earnings reports, as the market enters a gap between the second and third quarter earnings seasons, Dow component stocks Salesforce (CRM.US), Broadcom (AVGO.US), Lululemon (LULU.US), DocuSign (DOCU.US), and Macy's (M.US) will announce their results; notably, Figma (FIG.US) will also release its first earnings report since going public.

Last week, U.S. stocks closed with little change: on Thursday, optimism about the U.S. economy drove stock indices to record highs; however, on Friday (the last trading day of the week), inflation data that fell short of expectations triggered slight disappointment, leading to a market pullback.

Despite this, major stock indices still achieved their fourth consecutive month of gains. Among them, the S&P 500 index closed above 6,500 points for the first time on Thursday, marking the market's official entry into the last month of the third quarter of 2025.

Examining the "Abnormal" Labor Market

In July, signs of a slowdown in the U.S. labor market began to emerge—this is just the beginning of a turbulent month in the traditionally stable realm of economic policy.

In July, the U.S. economy added 73,000 jobs, while the employment data for May and June was revised down from previously reported gains of over 250,000 jobs to zero. Following the release of this report, Trump dismissed Erica McEntyre from her position as the director of the U.S. Bureau of Labor Statistics.

The market expects that in August, the U.S. economy will add 73,000 jobs, with the unemployment rate possibly rising to 4.3%.

On August 22, Federal Reserve Chairman Powell hinted in a key policy speech at the Jackson Hole Economic Symposium that the Fed might begin to cut interest rates at the September policy meeting, mentioning that there is an "abnormal balance" in the U.S. labor market.

Powell stated, "Although the labor market appears to be in a balanced state, this balance is quite unique—it results from a significant slowdown in both labor supply and demand."

He further added, "This unusual situation means that the downside risks facing the job market are increasing. Once these risks materialize, they could quickly manifest in the form of a significant increase in layoffs and a rise in the unemployment rate." Concerns about the health of the U.S. labor market seem to be prompting Powell to lean towards supporting a rate cut by the Federal Reserve. Previously, two members of the Federal Open Market Committee (FOMC) had already supported this move, and this week, this camp is expected to expand.

The Senate Banking Committee is scheduled to hold a hearing on Thursday regarding the nomination of Stephen Moore, a candidate nominated by Trump, who will replace Kugler, who resigned from the Federal Reserve Board on August 8. If Moore is approved by the Senate as expected, there will be another voice potentially supporting a more aggressive rate cut policy at the next Federal Reserve policy meeting on September 16.

However, it remains unclear whether Fed Governor Cook will be able to attend this meeting.

Last week, Cook filed a lawsuit against the president after being dismissed by Trump on charges of mortgage fraud. The judge has not yet made a ruling at the court hearing on Friday.

Despite the legal turmoil surrounding Cook, Trump, and the Federal Reserve, it is expected that there will be no short-term impact on this year's interest rate direction—markets generally believe that a rate cut remains a high probability event.

However, as Mohamed El-Erian pointed out earlier this week in a column, cracks in the foundation of the Federal Reserve's independence have begun to gradually emerge.

"The Seven Giants" Continue to Dominate the Market

As the second-quarter earnings season comes to a close (about 98% of S&P 500 constituents have reported their results), a major characteristic of the market has become increasingly clear: "The Seven Giants" still firmly control market dominance. These seven companies are Apple (AAPL.US), Amazon (AMZN.US), Google (GOOGL.US), Meta (META.US), Microsoft (MSFT.US), Nvidia (NVDA.US), and Tesla (TSLA.US).

Data released by FactSet analyst John Butters last Friday showed that the earnings growth rate of the "Seven Giants" in the second quarter reached 26.6%, far exceeding the 8.1% earnings growth rate of the other 493 companies in the S&P 500 during the same period.

Among them, the performance contributions of Meta, Microsoft, Amazon, and Nvidia occupied four of the top six contributors to the S&P 500's earnings growth in that quarter.

The only companies breaking the tech giants' "monopoly" were Vertex Pharmaceuticals (VRTX.US) and Warner Bros. Discovery (WBD.US): Vertex Pharmaceuticals turned a net loss of $3.6 billion in the same quarter last year into a profit of $1.03 billion; Warner Bros. Discovery turned a loss of nearly $10 billion in the same quarter last year into a profit of $1.6 billion.

Butters noted in the report that analysts expect the earnings growth of the "Seven Giants" to slow in the coming quarters, while the earnings growth of the other constituents of the S&P 500 is expected to accelerate again in early 2026 These two pieces of data indirectly explain why the rebound in the U.S. stock market has been so robust since the market bottomed out in mid-April.

On April 9, Trump ruled out the worst-case scenario of increased tariffs, which became a direct positive factor supporting the rise in the stock market. However, beyond that, both the leading companies in the S&P 500 index and the lesser-known constituent stocks have shown improvements in their fundamentals.

In the long term, earnings growth is the core factor determining stock price trends; in the short term, the "rate of change" in earnings growth has an even more critical impact on stock prices.

At the beginning of the second quarter earnings season, investors were concerned that the earnings growth rate for the quarter would slow significantly compared to the first quarter. However, as the earnings season neared its end, the market found that the actual slowdown was far less than expected.

From June 30 to last Friday's close, the S&P 500 index has risen a cumulative 5%