Economic data for investors to focus on this week include the August nonfarm payrolls report and the August unemployment rate, which will provide a clearer picture of the health of the labor market. Due to the Federal Reserve's heightened focus on the job market, any lower-than-expected data could spark speculation of an increased rate cut in September, or prompt the market to expect a more significant rate cut in the coming months.

The market is widely expecting nonfarm payrolls to increase by 163,000 in August. The U.S. Bureau of Labor Statistics (BLS) reported that the U.S. economy added 114,000 jobs in July, well below the downwardly revised 179,000 in June. The unemployment rate is expected to remain around 4.2% in August, after rising to 4.3% in July from 4.1% in June.

Another point of interest is July's JOLTs Job Openings report, which is expected to show 8.1 million job openings, slightly lower than June's 8.184 million.

Investors will also be closely watching the ISM Manufacturing Purchasing Managers' Index (PMI) for August. The market consensus forecasts the index to come in at 47.8, signaling a possible contraction in U.S. manufacturing activity.The July ISM Manufacturing PMI came in at 46.8, marking the largest contraction since November 2023.The index is expected to come in at 47.8, signaling a possible contraction in U.S. manufacturing activity.

The ISM Services PMI for August is expected to come in at 51.5, signaling a continued recovery in the services sector.The Services PMI rebounded to 51.4 in July, up from 48.8 in the previous month, signaling a modest rebound in the sector.

In addition to the economic data, a number of major companies are expected to report earnings, including Hewlett-Packard, Broadcom, Zscaler, Copart, and DocuSign.These earnings reports will provide insights into how companies are performing in the current economic environment and could influence market sentiment.

Last week, the U.S. stock market ended August trading on a positive note, with all three major stock indexes posting gains despite market volatility. The S&P 500 rose 3.9%, the Nasdaq gained 4.1%, and the Dow Jones Industrial Average rose 2%. With a new round of economic data and earnings releases, investors should pay close attention to how these factors affect market trends and Fed policy.