On Friday, Wall Street's primary indexes reached their lowest levels in over three weeks, following a significant jobs report that failed to alleviate concerns regarding the extent of the Federal Reserve's anticipated interest rate cut at its upcoming meeting.
The Labor Department's report indicated that U.S. employment
growth in August was below expectations; however, a decrease in the
unemployment rate to 4.2% pointed to a continued, orderly slowdown in the labor
market.
According to the CME Group's FedWatch Tool, traders assigned
a 73% probability to a 25-basis point rate cut in September, while the
likelihood of a 50-basis point reduction fell to 27%, down from a temporary
spike to 51% after the report was released.
Rate-sensitive growth stocks, including Alphabet and Tesla,
saw declines of 2.8% and 5.4%, respectively, while Nvidia dropped 4.4%,
approaching the $100 mark last seen in early August.
Melissa Brown, managing director of investment decision
research at SimCorp, noted, "There's uncertainty about what the Fed is
going to do."
She added, "We certainly would like to see rates come
down, but could an aggressive move indicate that they perceive the economy to
be in worse shape than anticipated?"
In the meantime, some Federal Reserve policymakers expressed
readiness to reduce interest rates at the upcoming meeting, with one suggesting
support for a more substantial cut if the cooling labor market requires
assistance.
The labor market has faced increased scrutiny following an
unexpected rise in the unemployment rate that raised recession concerns nearly
a month ago, contributing to a more than 10% decline in the tech-heavy Nasdaq
and a broader selloff in global markets.
As of 11:44 a.m. ET, the Dow Jones Industrial Average had
decreased by 329.57 points, or 0.81%, to 40,426.18, the S&P 500 was down
81.01 points, or 1.47%, to 5,422.40, and the Nasdaq Composite fell by 393.51
points, or 2.30%, to 16,734.15.
All major sectors of the S&P 500 were in the red, with
technology stocks leading the decline at 2.6%.
Wall Street's three primary indexes are poised to experience
a weekly decline.
The S&P 500, a key benchmark, is projected to fall by
over 3% this week, marking its most significant drop in 18 months, primarily
driven by a more than 6% decrease in technology stocks.
Historically, September has been a challenging month for
U.S. equities, with the S&P 500 averaging a decline of approximately 1.2%
since 1928.
Broadcom experienced a 9.2% drop after the chip manufacturer
projected fourth-quarter revenue slightly below expectations, impacted by weak
spending in its broadband division.
Other semiconductor companies, including Marvell Technology
and Advanced Micro Devices, saw declines of 5.1% and 4.5%, respectively,
contributing to a 4.2% decrease in the Philadelphia SE Semiconductor index,
which is on track for its largest weekly decline since March 2020.
Additionally, Super Micro Computer fell by 6.4% following a
downgrade of its shares from "overweight" to "neutral" by
J.P. Morgan.
On the NYSE, declining stocks outnumbered advancing ones by
a ratio of 2.79-to-1, while on the Nasdaq, the ratio was 3.37-to-1. The S&P
500 recorded 16 new 52-week highs and 12 new lows, whereas the Nasdaq Composite
noted 19 new highs and 134 new lows.