Dow, S&P 500, Nasdaq in worst week

Worst Week
Worst Week

The U.S. stock market experienced a volatile start to September, with major indices closing in the red on Friday.

The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all suffered significant losses, marking the worst week for the Nasdaq since June 2022 and the S&P 500 since March 2023. Investors digested a crucial jobs report that provided clues to the size of this month’s expected interest rate cut.

The report showed a lower-than-expected addition of about 165,000 jobs, and prior month job growth was revised lower, indicating signs of continued cooling in the labor market. The unemployment rate ticked back down to 4.2%. This report shifted expectations for the Federal Reserve to enact a more sizable rate cut at its meeting in less than two weeks.

Traders now see a 50-50 chance of a 50 basis point cut, a significant increase from last Thursday’s odds. Fed Governor Chris Waller stated, “The time has come to lower interest rates.

If the data supports cuts at consecutive meetings, then I believe it will be appropriate to cut at consecutive meetings.

In corporate news, chipmaker Broadcom’s shares fell more than 10%.

While the Apple supplier benefits from a surge in AI spending, its other divisions are falling short.

Markets digesting cooling job growth

This dragged down other chip stocks, with shares of AI heavyweight Nvidia falling about 4%.

Analysts have slashed their earnings expectations for the current quarter by 2.8% during July and August. Citi US equity strategist Scott Chronert noted that these revisions are uninspiring but stable. Next week, all eyes will be on inflation as investors await the latest update on consumer prices.

The report, set for release on Wednesday, is expected to show headline inflation of 2.6%, a deceleration. On a “core” basis, prices in August are expected to have risen 3.2% over the last year, unchanged from July. Oil prices are under pressure following a weak US jobs report, with crude prices falling about 2% to trade just below $68 a barrel.

Brent crude also dipped around 2%, hovering above $71 a barrel. Michael Darda, chief economist and macro strategist at Roth Capital Partners, expressed skepticism about the US economy achieving a “soft landing,” suggesting that a recession could still take shape despite current appearances. Shares of Nvidia sank as much as 5% on Friday, leading the sell-off in chip stocks.

The semiconductor sector dragged the markets lower following a forecasted slowdown in sales.

Harper Johnson

Harper Johnson stands at the forefront of digital marketing, where she dissects and interprets the impact of online advertising trends, social media dynamics, and search engine algorithms on consumer behavior.

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