While data showed an increase in jobless claims — adding to signs of a slowing labor market — the solid factory purchasing managers index saw traders reducing their bets on rate cuts. Money markets showed about a 65% chance of a reduction in September. A week ago the odds were above 90%.

The Fed is getting ready to kick off its economic symposium in Jackson Hole. Central bankers and economists from around the world are on their way to the gathering, which will focus on structural changes in the labor market. Chair Powell will speak Friday.

“The great PMI numbers have made it more difficult for Powell to pivot to employment weakness for tomorrow, said Andrew Brenner at NatAlliance Securities. “No fun in the equity space either.”

Meantime, the Justice Department signaled possible plans to investigate Fed Governor Lisa Cook, with a top official encouraging Powell to remove her from the board. President Donald Trump’s housing-finance chief, Bill Pulte, has called for a probe over mortgage agreements she allegedly made in 2021.