Major U.S. stock indexes were mixed early Friday after the eagerly anticipated August employment report showed that the labor market continues cooling, as investors try to gauge how the latest data could affect the Federal Reserve’s upcoming decision on interest rates.
The Dow Jones Industrial Average was up 0.4%, while the S&P 500 and the Nasdaq Composite were off 0.3% and 0.8%, respectively, about half an hour into the trading session. The S&P 500 has closed lower in three consecutive sessions, and all three major indexes are poised to post weekly losses.
U.S. stocks have gotten off to a sluggish start this month as concerns about the health of the economy have resurfaced, with market participants scrutinizing every data release closely. Employment indicators have taken on particular importance as Fed officials have increasingly highlighted concerns about a cooling labor market as a primary factor influencing their decisions as they consider cutting interest rates for the first time in four years.
The August jobs report from the Labor Department, released early Friday, showed that U.S. employers added 142,000 jobs last month, up from the downwardly revised July figure of 89,000 but lower than the 161,000 figure that economists had expected. The unemployment rate fell to 4.2% in August, down from 4.3% the month before and in line with expectations.
Shortly after the release of the data, market participants were pricing in a more than 50% likelihood that the Fed would cut its influential fed funds rate by half a percentage point at its next policy meeting on Sept. 18, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data. In recent trading, however, the likelihood had fallen to 39%, which is right where it was before the jobs report came out. Fed Chair Jerome Powell has signaled that rate cuts could come as soon as this month, but has said that incoming data will drive the decisions on the pace and depth of the easing.
The yield on 10-year Treasurys, which is tightly correlated to expectations around where interest rates are headed, fell below 3.70% early Friday morning for the first time since early August when the last jobs report roiled markets. The yield was at 3.75% recently.
Among stocks on the move Friday, AI investor favorite Nvidia (NVDA) was down nearly 3%, leading a broader downturn for mega-cap tech stocks. Alphabet (GOOGL), Meta Platforms (META), Amazon (AMZN) and Microsoft (MSFT) were all moving lower, while Apple (AAPL) was up about 1%.
Shares in Broadcom (AVGO) were down 10%, leading S&P 500 decliners, after the chipmaking giant reported quarterly results that topped analysts’ expectations but issued a soft revenue outlook.
Gold future were down slightly to around $2,540, while bitcoin rose slightly to around 56,300 after hitting its lowest level in a month.
Bitcoin Trading at Lowest Levels Since Early August
1 hr 52 min ago
Bitcoin (BTC) lost ground in early trading on Friday, moving below $56,000, after falling more than 3% yesterday as investors braced for the highly anticipated August jobs report, a key piece in the puzzle for gauging the timing and size of widely expected interest rate cuts by the Fed.
Rate cuts could provide a boost to the legacy cryptocurrency, which has fallen around 24% since setting its record high on March 14 amid a lack of new narratives to drive bullish sentiment.
Bitcoin has oscillated within a channel-like pattern since topping out in March this year, with the price recently trading towards the pattern’s lower trendline.
Investors should watch key support levels on Bitcoin’s chart at $53,000 and $47,000, while monitoring important resistance levels at $65,000 and $68,500.
Read the full technical analysis piece here.
Broadcom Price Levels to Watch as Stock Tumbles
1 hr 59 min ago
Broadcom (AVGO) shares were down more than 7% in premarket trading after the chipmaker late Thursday reported fiscal third-quarter results that topped expectations but issued light revenue guidance for the current quarter.
Broadcom shares have traded within a symmetrical triangle on declining volume since mid-June, with the price sending an ominous signal ahead of the chipmaker’s quarterly report by testing the pattern’s lower trendline. The stock sits positioned to stage a significant breakdown from the triangle on Friday.
Investors should monitor important lower price levels on Broadcom’s chart at $141, $120, $104, and $91.
Read the full technical analysis piece here.
How Will the Jobs Report Affect Rate-Cut Expectations?
2 hr 22 min ago
One of the big questions heading into this morning’s release of the August employment report is how the data will affect the Federal Reserve’s thinking about interest rate cuts.
Fed Chair Jerome Powell has signaled that rate cuts could come as soon as the mid-September meeting of the central bank’s policy committee, but has said that incoming data will drive the decisions on the pace and depth of the easing.
Heading into Friday’s data release, market participants were pricing in a 39% likelihood that the Fed will cut the influential fed funds rate by half a percentage point when it meets on Sept. 18, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data. While that’s up from the 30% chance that was priced in a week ago, it’s down from around 70% a month ago when markets tanked following the weaker-than-expected July jobs report.
If the number of jobs added in August comes in far below the 161,000 estimated by economists or the unemployment rate is higher than the 4.2% consensus view, expectations for a half-point rate cut are likely to rise.
Looking further out, market participants see an 85% likelihood that the fed funds rate will be cut a full percentage point by the end of 2024, to a range of 4.25%-4.50%. That would mean that the Fed has to make at least one half-point cut in one of its three remaining scheduled meetings.
Major Index Futures Lower Ahead of Jobs Report
3 hr 7 min ago
Futures tied to the Dow Jones Industrial Average were down 0.4%.
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S&P 500 futures were down 0.7%.
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Nasdaq 100 futures were off 1.2%.
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