US stocks experienced a notable reversal on Friday as investors reacted to a disappointing jobs report, indicating a rapidly cooling labor market. The S&P 500 declined by 0.4%, retreating from an all-time closing high reached on Thursday. Similarly, the Dow Jones Industrial Average fell by 0.5%, and the Nasdaq Composite experienced a slight dip of roughly 0.2%. These declines follow a period of significant gains earlier in the session, reflecting the market’s volatile response to economic data.
According to the Bureau of Labor Statistics, the U.S. economy added only 22,000 jobs in August, falling far short of the anticipated 75,000. This slowdown contributed to an increase in the unemployment rate, which rose to 4.3%, compared to 4.2% in the previous month. Revised figures for the preceding months revealed that over the last three months, the U.S. economy added fewer than 30,000 jobs, with June marking the first instance of labor market contraction since 2020.
This jobs report, the first issued since President Trump dismissed the head of the BLS, capped a week filled with indicators of a weakening labor market, bolstering Wall Street’s expectation that the Federal Reserve will implement interest rate cuts in its upcoming September meeting. Market participants are now anticipating a 100% chance of a reduction, with increasing speculation surrounding a possible “jumbo” cut of 50 basis points.
In response to the jobs data, Treasury yields fell sharply, with the 30-year yield dropping below 4.79% after nearing 5% earlier in the week. The 10-year yield also decreased to 4.07%, the lowest level since April.
In a social media post following the jobs report, Trump intensified his critique of Fed Chair Jerome Powell, stating, “Jerome ‘Too Late’ Powell should have lowered rates long ago. As usual, he’s ‘Too Late!’” This comment came shortly after a Senate hearing regarding Trump’s nominee, Stephen Miran, for a seat on the Fed’s board, coinciding with ongoing efforts by the White House to reshape the central bank in favor of rate cuts.
In the technology sector, optimism surrounding artificial intelligence was fueled by positive news from Broadcom, which reported strong quarterly results and announced a significant deal to supply chips for OpenAI. Broadcom’s shares soared by over 10%, adding nearly $140 billion to its market capitalization in intraday trading.
Tesla’s stock also saw gains after the company’s board proposed a performance-linked pay package for CEO Elon Musk, potentially worth up to $1 trillion if certain corporate milestones are achieved.
In commodities, gold prices surged to record levels following the weak jobs report, with futures climbing past $3,650 per ounce after a nearly 6% increase over the past five sessions. Gold has risen nearly 40% year-to-date, driven by expectations of an imminent Federal Reserve rate cut and increasing concerns over the independence of the Fed after Trump’s recent actions.
Amid the deteriorating labor market landscape, the broader implications for investors have become increasingly apparent, raising concerns over economic stability and future growth prospects. Analysts have noted that the labor market appears to be in a precarious state, raising questions about the sustainability of consumer spending and business investment in the near term.
As the market continued to absorb the news, traders positioned themselves accordingly, with significant fluctuations expected as the economic implications of the latest jobs data are further analyzed in the coming weeks.
