-
U.S. stocks fell sharply on Friday after a weak August jobs report raised recession fears.
-
The S&P 500 had its worst week since March 2023, falling about 4%.
-
The Federal Reserve is expected to cut interest rates by 25 basis points at its meeting on September 18.
U.S. stocks fell sharply on Friday after a weaker-than-expected August jobs report sparked fresh fears of a recession.
The S&P 500 closed its worst week since March 2023, falling about 4% on the week, while the Nasdaq 100 fell nearly 6%.
The U.S. economy added 142,000 jobs in August, below economists’ median estimate of 164,000. The unemployment rate fell to 4.2% from 4.3%.
While the jobs report was not as surprising as the July reading, which saw the unemployment rate rise unexpectedly, it confirmed the cooling labor market and the need for the Federal Reserve to cut interest rates at its Sept. 18 policy meeting.
New York Federal Reserve President John Williams said in a speech Friday that it’s time to cut rates.
“It is now appropriate to reduce the degree of restriction in the policy stance by lowering the target range for the federal funds rate,” Williams said.
The market expects a 25 basis point interest rate cut by the Federal Reserve later this month, according to CME’s FedWatch tool. Earlier in the day, the rate was hovering between 25 and 50 basis points.
The August report provides a telling illustration of how the US labor market has weakened in recent months: the three-month moving average of monthly job gains fell from just under 270,000 in March to just over 110,000 in August.
JPMorgan wrote after the report that the data pointed to “waning vigor” in the labor market and should prompt a larger 50-basis-point cut by the Fed at its next meeting.
But the stock market’s weakness over the past week is typical, according to Fundstrat’s Tom Lee, who believes this drop is coming at just the right time given September’s weak seasonality.
“While we are cautious about the next eight weeks, for us stocks are at the lower end of the range and we see more upside than downside,” Lee told clients in a note Friday.
Analysts at Ned Davis Research echoed this sentiment, saying the September sell-off was ultimately a buying opportunity as the stock market approached its best three-month period of the year.
Here’s where the US indices stood at 4pm close on Friday:
Here’s what else happened on Friday:
In commodities, bonds and cryptocurrencies:
-
West Texas Intermediate crude oil fell 1.55% to $68.08 a barrel. Brent crude, the international benchmark, fell 1.83% to $71.36 a barrel.
-
Gold fell 0.82% to $2,522.20 an ounce.
-
The yield on the 10-year Treasury note fell 1 basis point to 3.719%.
-
Bitcoin fell 4.48% to $53,651.
Read the original article on Business Insider