U.S. Stocks Decline Amid Labor Market Slowdown

By Chibuike Oguh
NEW YORK (Reuters) – U.S. stocks fell on Friday, weighed down by a jobs report signaling a labor market slowdown, leaving traders uncertain about Federal Reserve interest rate cuts.

All three major indexes suffered losses, with the 11 sectors of the S&P 500 declining, particularly in communication services, consumer discretionary, and technology stocks.

The S&P 500 and Dow experienced their largest weekly drops since March 2023, while the Nasdaq noted its biggest drop since January 2022.

U.S. Labor Department data indicated that employers added 142,000 jobs in August, below analyst expectations, and the growth for July was revised down to 89,000. This report suggests that Federal Reserve chair Jerome Powell’s upcoming rate decision could be critical yet potentially too late for a soft landing.

Lou Basenese, president and chief market strategist at MDB Capital, commented, “If layoffs appear in the next month or two, it will suggest his timing was too late.” He anticipates downward pressure on stocks until the Fed confirms a rate cut, speculating a 50-basis point cut could be possible.

Fed Governor Christopher Waller stated that the time has come for the Fed to initiate a series of interest rate cuts, and the market anticipates a 73% chance of a 25-basis point rate cut in September.

The stock market showed evident declines:
– Dow Jones Industrial Average: down 410.34 points (1.01%) to 40,345.41
– S&P 500: down 94.99 points (1.73%) to 5,408.42
– Nasdaq Composite: down 436.83 points (2.55%) to 16,690.83

Leading growth stocks, known as the Magnificent Seven, contributed to the market decline:
– Nvidia: -4%
– Tesla: -8.4%
– Alphabet: -4%
– Amazon: -3.7%
– Meta: -3.2%
– Microsoft: -1.6%
– Apple: -0.70%

Broadcom dropped 10.4% as its fourth-quarter revenue forecast fell short of estimates. Other semiconductor stocks experienced setbacks, with the Philadelphia SE Semiconductor index logging its largest weekly drop since March 2020.

Declining issues outnumbered advancers by a 3.08-to-1 ratio on the NYSE, and on Nasdaq, 1,006 stocks rose against 3,183 that fell, marking a 3.16-to-1 ratio.

Total volume across U.S. exchanges was approximately 11.8 billion shares, up from a 20-day moving average of 10.7 billion shares.