US stocks saw a reversal on Friday as investors reacted to a weaker-than-expected jobs report, anticipating imminent interest-rate cuts in light of a series of disappointing labor market data. The S&P 500 fell 0.3%, stepping back from a record high reached just a day earlier. The Dow Jones Industrial Average also experienced a decline, losing 0.5%, while the tech-heavy Nasdaq Composite dropped slightly below the flatline, following earlier gains in the session.
The Bureau of Labor Statistics reported that the US economy added a mere 22,000 jobs in August, significantly below expectations of 75,000. This disappointing figure points to a substantial slowdown in the labor market, exacerbated by a rise in the unemployment rate to 4.3%, up from 4.2% in July. Revisions to the employment figures for June and July indicate that the economy created fewer than 30,000 new jobs across the three-month period, marking June as the first month of job losses since 2020.
The release of the jobs report, the first since President Trump dismissed the head of the BLS, capped a week filled with data revealing cracks in the labor market. Wall Street responded with growing confidence that a rate cut is on the horizon, with traders marking a 100% likelihood of a reduction during the Federal Reserve’s upcoming September meeting. There is also rising speculation about a substantial 50-basis-point cut.
In response to the jobs report, Treasury yields dropped sharply, with the 30-year yield falling below 4.79% after having neared the 5% mark earlier in the week. The 10-year yield decreased to 4.07%, its lowest level since April.
Following the report, Trump reiterated his critique of Federal Reserve Chair Jerome Powell, stating on social media that Powell has been “too late” in making necessary rate adjustments. His comment followed a Senate hearing to confirm Trump’s nominee for the Fed governorship, highlighting ongoing tensions between the White House and the central bank as the administration seeks to push for rate cuts.
In tech, shares of Broadcom surged after an optimistic earnings outlook and confirmation of a deal to produce chips for OpenAI. Broadcom’s stock rose approximately 9%, significantly bolstering its market capitalization. Conversely, shares of Tesla gained following the announcement of a proposed $1 trillion compensation package for CEO Elon Musk, contingent upon meeting specific performance milestones.
Additionally, Kenvue—a consumer health company that emerged from Johnson & Johnson—saw its stock fall sharply, dropping over 12% after a Wall Street Journal report suggested Health Secretary Robert Kennedy may link the painkiller Tylenol to autism. Despite the decline, Kenvue maintained a firm stance on the safety of its product.
As the market prepares for upcoming economic indicators, including a monthly inflation report due next week, investors remain watchful for any signals that could clarify the future direction of Federal Reserve policy, particularly concerning potential interest rate adjustments. The current atmosphere reflects heightened uncertainty, with traders closely monitoring economic trends and labor market developments.
