US Stock Market Suffers Worst Week Since March 2023 Following Weak Jobs Report

S&P 500 heading for its worst week since March 2023

Wall Street is heading for its worst week in 18 months after a weaker-than-expected jobs report on Friday stoked investor concerns about slowing U.S. economic growth. Technology stocks took the brunt of the pain. The Nasdaq composite sank 2.6% as Broadcom, Nvidia and other tech companies led the market lower on continued worries that their shares soared too high in the boom around artificial intelligence. The S&P 500 tumbled 1.6% in afternoon trading, putting it on pace for its worst week since March 2023. The Dow Jones Industrial Average sank 452 points, or 1.1%, as of 2:40 Eastern time after flipping an early gain of 250 points. The market swooned after the August jobs report showed U.S. employers hired fewer workers than economists expected, while government data showed that hiring was even weaker in July than earlier reported. It's the second straight month where hiring has come in below forecasts, worsening worries after recent data showed weakness in manufacturing and some other areas of the economy. Friday's rout comes a month after markets tumbled on a disappointing July jobs report, which also sparked fears that the U.S. labor market is cracking under the highest interest rates in 23 years. "Markets have had to grapple with -- just as the Fed is doing -- whether the August payroll data reflects a labor market normalizing towards pre-Covid levels or whether it's indicative of an economy losing dangerous momentum," noted Quincy Krosby, chief global strategist for LPL Financial, in an email. Krosby added, "The lower unemployment number versus the downward revisions presents a quandary given the pattern of downward revisions indicating more serious economic conditions becoming entrenched." The action was even wilder in the bond market, where Treasury yields tumbled, recovered and then fell again following the jobs report. Such a weakening in the job market is actually just what the Federal Reserve and its chair, Jerome Powell, have been trying to induce in order to stifle high inflation, "but only to a certain extent and the data is now testing Chair Powell's stated limits," said Scott Wren, senior global market strategist at Wells Fargo Investment Institute. The weaker-than-expected hiring is raising questions about how much the Federal Reserve will have to cut its main interest rate by at its meeting later this month. Powell has already indicated the Fed is likely to cut rates for the first time since the 2020 COVID crash. The Fed wants to protect the job market and keep the economy from sliding into a recession after keeping the federal funds rate at a two-decade high for more than a year. Such cuts can boost investment prices, particularly if the Fed jumps beyond the traditional-sized move of a quarter of a percentage point. But the worry on Wall Street is that the Fed may be moving too little, too late and that the slowing U.S. economy could fall into a recession. That would undercut corporate profits and erase the benefits from lower rates. "All is not well with the labor market," said Brian Jacobsen, chief economist at Annex Wealth Management. "The Fed wanted the labor market to come into better balance, but any balancing act is unstable." Still, the jobs report did include some more encouraging data points. For one, the unemployment rate improved to 4.2% from 4.3% a month earlier. That was better than economists expected. And even if August's hiring was weaker than forecast, it was still better than July's pace. Christopher Waller, a member of the Fed's board of governors, said in a speech after the jobs report's release that recent economic data supports a new direction from the central bank, noting, "the current batch of data no longer requires patience, it requires action." "While the labor market has clearly cooled, based on the evidence I see, I do not believe the economy is in a recession or necessarily headed for one soon," he said. While Waller said he thinks a "series of reductions" to rates is appropriate given that a slowing job market now looks like the bigger threat for the economy than high inflation, he also said the ultimate pace and depth of those cuts is still to be determined. On Wall Street, Broadcom tumbled 8.9% despite reporting profit and revenue for the latest quarter that were above analysts' forecasts, thanks in large part to the boom around artificial intelligence. The chip company said it expects to make $14 billion in revenue this quarter, which was slightly below analysts' expectations of $14.11 billion, according to FactSet. Other chip companies also fell, including a 4.4% drop for Nvidia. After soaring earlier this year as its revenue surged due to the AI frenzy, Nvidia's stock has been shaky since mid-July as investors question whether they took it too high. That's even though Nvidia has continued to top analysts' expectations for growth. Big Tech companies have grown into the market's most influential after their superstar runs made them even more massive, and Nvidia was Friday's single heaviest weight on the S&P 500. The losses were nevertheless widespread, and more than 80% of stocks in the S&P 500 were falling. The smaller stocks in the Russell 2000, whose profits tend to be more closely tied with the strength of the U.S. economy than many big multinationals, fell 1.5%. On the winning side of Wall Street was U.S. Steel, which rose 5.6% after the CEO of rival Cleveland Cliffs told MSNBC that his company would still be interested in acquiring U.S. Steel if the White House were to block its proposed sale to Japan's Nippon Steel. Lourenco Goncalves also accused Nippon of frequent breaches of trade policies and cited national security issues if the proposed $14 billion Nippon-U.S. Steel were to go through.

S&P 500 faces worst week since March 2023

The S&P 500 was 1.6% lower in midday trading and heading for its worst week since March 2023. The Dow Jones Industrial Average was down 367 points, or 0.9%, as of 11:55 a.m. Eastern time, after flipping an early gain of 250 points. The Nasdaq composite sank 2.4% as Broadcom, Nvidia and other tech companies led the market lower on continued worries that their prices soared too high in the boom around artificial-intelligence tech. The action was even wilder in the bond market, where Treasury yields tumbled, recovered and then fell again after the jobs report showed U.S. employers hired fewer workers in August than economists expected. It's the second straight month where hiring has come in below forecasts, worsening worries after recent data showed weakness in manufacturing and some other areas of the economy. Such a weakening in the job market is actually just what the Federal Reserve and its chair, Jerome Powell, have been trying to induce in order to stifle high inflation, "but only to a certain extent and the data is now testing Chair Powell's stated limits," said Scott Wren, senior global market strategist at Wells Fargo Investment Institute. The weaker-than-expected hiring raised questions about how much the Federal Reserve will have to cut its main interest rate by at its meeting later this month. Powell has already indicated the Fed is likely to cut rates for the first time since the 2020 COVID crash. The Fed wants to protect the job market and keep the economy from sliding into a recession after keeping the federal funds rate at a two-decade high for more than a year. Such cuts can boost investment prices, particularly if the Fed jumps beyond the traditional-sized move of a quarter of a percentage point. But the worry on Wall Street is that the Fed may be moving too little, too late and that the slowing U.S. economy could fall into a recession. That would undercut corporate profits and erase the benefits from lower rates. "All is not well with the labor market," said Brian Jacobsen, chief economist at Annex Wealth Management. "The Fed wanted the labor market to come into better balance, but any balancing act is unstable." Still, the jobs report did include some more encouraging data points. For one, the unemployment rate improved to 4.2% from 4.3% a month earlier. That was better than economists expected. And even if August's hiring was weaker than forecast, it was still better than July's pace. Christopher Waller, a member of the Fed's board of governors, said in a speech after the jobs report's release that "I believe we should be data dependent, but not overreact to any data point, including the latest data." "While the labor market has clearly cooled, based on the evidence I see, I do not believe the economy is in a recession or necessarily headed for one soon," he said. While Waller said he thinks a "series of reductions" to rates is appropriate given that a slowing job market now looks like the bigger threat for the economy than high inflation, he also said the ultimate pace and depth of those cuts is still to be determined. All the uncertainty sent Treasury yields on a wild ride in the bond market as traders tried to handicap the Fed's next moves. The two-year Treasury yield initially fell as low as 3.64% after the release of the jobs report, before quickly climbing back above 3.76%. It then dropped back to 3.66% following Waller's comments, down from 3.74% late Thursday. The 10-year Treasury yield, which moves more with expectations for longer-term economic growth and inflation, slipped to 3.67% from 3.73% late Thursday. It also swung between gains and losses following the jobs report. On Wall Street, Broadcom tumbled 9% despite reporting profit and revenue for the latest quarter that were above analysts' forecasts, thanks in large part to the boom around artificial intelligence. The chip company said it expects to make $14 billion in revenue this quarter, which was slightly below analysts' expectations of $14.11 billion, according to FactSet. Other chip companies also fell, including a 5% drop for Nvidia. After soaring earlier this year as its revenue surged due to the AI frenzy, Nvidia's stock has been shaky since mid-July as investors question whether they took it too high. That's even though Nvidia has continued to top analysts' expectations for growth. Big Tech companies have grown into the market's most influential after their superstar runs made them even more massive, and Nvidia was Friday's single heaviest weight on the S&P 500. The losses were nevertheless widespread, and more than 80% of stocks in the S&P 500 were falling. The smaller stocks in the Russell 2000, whose profits tend to be more closely tied with the strength of the U.S. economy than many big multinationals, fell 1.9%. On the winning side of Wall Street was U.S. Steel, which rose 5.1% after the CEO of rival Cleveland Cliffs told MSNBC that his company would still be interested in acquiring U.S. Steel if the White House were to block its proposed sale to Japan's Nippon Steel. Lourenco Goncalves also accused Nippon of frequent breaches of trade policies and cited national security issues if the proposed $14 billion Nippon-U.S. Steel were to go through. In stock markets abroad, indexes fell across much of Europe and Asia. Trading was halted in Hong Kong because of a typhoon.

US stock market faces worst week in nearly 18 months following weak jobs data report - Times of India

US stock market on Friday registered one of its worst performances, with technology stocks taking the hardest hit followed by a US job market report that came in weaker than expected, adding to concerns about the economy. The decline was largely attributed to weak performance of some large tech stocks that had been benefiting from the AI boom. The S&P 500 declined 1.7% or 94.99 points to close at 5,408.42 marking its worst week since March 2023, while the Nasdaq fell 2.6% or 436.83 points, settling at 16,690.83, led by tech companies like Broadcom and Nvidia.The Dow Jones Industrial Average also shed 410 points (1%) after initially gaining 250 points in the morning, ending at 40,345.41. However, despite the market's turbulent week, the S&P 500 remains just 4.6% below its record high set in July and is still up 13.4% for 2024 so far, which is considered a good performance. The jobs report, considered the most important of the year, showed that US employers hired fewer workers in August than economists had predicted, marking the second consecutive month of lower-than-expected hiring. This data, along with recent reports indicating weakness in manufacturing and other economic sectors, has raised questions about the extent to which the Federal Reserve will cut its main interest rate at its upcoming meeting. Meanwhile, the report also contained some positive indicators as the unemployment rate decreased from 4.3% to 4.2%, and August's job growth, although weaker than anticipated, surpassed July's figures. The Federal Reserve has been working to curb high inflation by maintaining the federal funds rate at a two-decade high for over a year. However, the central bank is now expected to shift its focus towards protecting the job market and preventing a recession. While interest rate cuts can boost investment prices, there are concerns on Wall Street that the Fed may be acting too late. If a recession does occur, it would negatively impact corporate profits and negate the benefits of lower rates. "All is not well with the labor market," said Brian Jacobsen, chief economist at Annex Wealth Management. "The Fed wanted the labor market to come into better balance, but any balancing act is unstable." Federal Reserve board member Christopher Waller highlighted the importance of being data-driven without overreacting to individual data points. He expressed his belief that the economy is not currently in a recession or necessarily heading towards one in the near future. Waller acknowledged the cooling labor market and suggested that a series of rate reductions may be appropriate, given that slowing job growth now appears to be a more significant concern than high inflation. However, he noted that the specific pace and extent of these cuts remain undetermined. Broadcom declined 10.4% despite surpassing analysts' expectations for profit and revenue in the recent quarter, partially attributed to AI. The company's projected revenue of $14 billion for the current quarter fell slightly short of analysts' forecasts of $14.11 billion, according to FactSet. Consequently, Broadcom's stock suffered a substantial weekly drop of 15.9%. Additionally, other chip companies, including Nvidia, also fell on Friday, with Nvidia's stock falling by 4.1%. Following a surge earlier in the year due to increased revenue driven by the AI frenzy, Nvidia's stock has been volatile since mid-July as investors reassess its valuation. Given its substantial market influence, Nvidia's stock significantly impacts Wall Street, and it recorded a weekly decline of 13.9% despite consistently exceeding analysts' growth expectations. On the positive side, US Steel experienced a 4.3% increase after the CEO of competitor Cleveland Cliffs expressed interest in acquiring US Steel during an MSNBC interview, even if the White House were to block the proposed sale to Japan's Nippon Steel. Additionally, the bond market witnessed sharp swings as well, with Treasury yields fluctuating throughout the day following the release of the jobs report. The two-year Treasury yield initially dropped to 3.64% following the release of the jobs report, before quickly rebounding above 3.76%. It then fell back to 3.66% after Waller's comments, down from 3.74% at the close of the previous day. The TOI Business Desk is a vigilant and dedicated team of journalists committed to delivering the latest and most relevant business news from around the world to readers of The Times of India. The primary focus of the TOI Business Desk is to keep a watchful eye on the global business landscape, covering a wide spectrum of industries, markets, economic trends, in-depth analysis, exclusive reports and breaking stories that impact businesses and economies. With a mission to provide valuable insights and updates, the desk ensures that TOI readers are well-informed about the ever-changing and dynamic world of commerce and can navigate the complexities of the business world.

US stock market indexes close in red, S&P 500 sees worst week since March. Check performance of top shares

US stock market indexes closed for the week in red after tach stocks fell. Only US steel performed as expected.S&P 500, Nasdaq composite, and Dow Jones fell on Friday as US stock market indexes were hit by technology company's shares. A highly anticipated update on the U.S. job market came in weak enough to add to worries about the economy. The S&P 500 dropped 1.7 per cent to close out its worst week since March 2023. Broadcom, Nvidia and other tech companies led the market lower as worries continue that their prices soared too high in the boom around artificial intelligence, and they dragged the Nasdaq composite down by a market-leading 2.6 per cent. The Dow Jones Industrial Average dropped 410 points, or 1 per cent, after erasing a morning gain of 250 points. S&P 500 fell 94.99 points to 5,408.42. The Dow dropped 410.34 to 40,345.41, and the Nasdaq composite lost 436.83 to 16,690.83. Despite its dismal week, the S&P 500 remains just 4.6 per cent below its all-time high set in July. It's also still up 13.4 per cent for 2024 so far, which counts as a good year. Broadcom tumbled 10.4 per cent despite reporting profit and revenue for the latest quarter that were above analysts' forecasts, thanks in part to AI. The chip company said it expects to make $14 billion in revenue this quarter, which was slightly below analysts' expectations of $14.11 billion, according to FactSet. Other chip companies also fell, including a 4.1 per cent drop for Nvidia. After soaring earlier this year as its revenue surged on the AI frenzy, Nvidia's stock has been shaky since mid-July as investors question whether they took it too high. That's even though Nvidia has continued to top analysts' expectations for growth. On the winning side of Wall Street was U.S. Steel, which rose 4.3 per cent after the CEO of rival Cleveland Cliffs told MSNBC that his company would still be interested in acquiring U.S. Steel if the White House were to block its proposed sale to Japan's Nippon Steel. Q1. How has S&P 500 performed? A1. S&P 500 dropped 1.7 per cent to close out its worst week since March 2023. S&P 500 remains just 4.6 per cent below its all-time high set in July. It's also still up 13.4 per cent for 2024 so far, which counts as a good year. Q2. What are US stock market indexes? A2. US stock market indexes are S&P 500, Nasdaq composite, and Dow Jones.