U.S. stocks experienced a reversal on Friday following the release of a disappointing jobs report, which indicated a significant slowdown in the labor market. The S&P 500 saw a decline of 0.3%, pulling away from the all-time closing high reached the previous day, while the Dow Jones Industrial Average dropped 0.5%. The Nasdaq Composite edged slightly lower as well, reflecting a pullback from earlier session gains.
The Bureau of Labor Statistics reported that the economy added merely 22,000 jobs in August, a figure that fell far short of the anticipated 75,000. This report, which signifies more signs of a weakening labor market, also noted an increase in the unemployment rate to 4.3%, compared to 4.2% in July. Revisions to prior months’ data suggested that over the past three months, fewer than 30,000 new jobs were added. Notably, June’s data now reflects a loss of 13,000 jobs, marking the first contraction in the labor market since 2020.
The jobs report caps a week filled with weak labor data and has fueled speculation about imminent interest rate cuts by the Federal Reserve during its September meeting. Market observers are now pricing in a complete certainty regarding a rate reduction, with growing interest in the possibility of a more substantial cut of 50 basis points.
Following the data release, Treasury yields fell sharply, with the 30-year yield dropping to below 4.79%, after nearing 5% earlier in the week, while the benchmark 10-year yield fell to 4.07%, marking its lowest level since April.
In response to the jobs report, former President Trump intensified his criticism of Federal Reserve Chair Jerome Powell, denouncing him on social media as “too late” in adjusting interest rates. This comment comes on the heels of a Senate confirmation hearing for Trump’s appointee, Stephen Miran, as the White House appears to seek greater influence over the Federal Reserve’s rate-setting decisions.
In the tech sector, Broadcom experienced a surge, with its shares rising approximately 9% after positive projections regarding its AI business and the announcement of a sizable deal to produce chips for OpenAI. Tesla’s stock rose after the company’s board presented a proposal for a compensation package for CEO Elon Musk, potentially worth $1 trillion based on performance targets.
Friday’s trading was marked by a blend of optimism and caution as investors begin to focus on upcoming inflation data, which could further influence Federal Reserve policy. The discussions surrounding rate cuts are set against the backdrop of the ongoing economic uncertainties and revisions to labor market performance.
Overall, the day highlighted a volatile mix of performance in key sectors, with broader implications for monetary policy and the outlook for the economy as a whole. As traders brace for the upcoming Federal Reserve meeting, the job market’s performance will be a critical area of focus in the weeks to come.
