STORY: The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all tumbled Friday morning as investors reacted to a weaker-than-expected U.S. jobs report.
The Labor Department said the unemployment rate jumped to near a three-year high of 4.3% in July as hiring slowed significantly.
That heightened fears the economy was vulnerable to a recession.
The uptick in the unemployment rate marked the fourth straight monthly increase.
Still, layoffs aren’t a significant factor at this point, as the labor market slowdown was driven by weak hiring.
Employers added 114,000 jobs last month which was well below forecasts and June’s number was revised lower.
The healthcare sector continued to lead employment gains followed by construction.
But information industry payrolls dropped.
The data on Friday effectively seals the case for the U.S. Federal Reserve to cut interest rates in September.
Fed Chair Jerome Powell told reporters on Wednesday that while he viewed the changes in the labor market as “broadly consistent with a normalization process,” policymakers were “closely monitoring to see whether it starts to show signs that it’s more than that.”
One economist told Reuters the latest snapshot of the labor market is consistent with a slowdown, not necessarily a recession, though early warning signs suggest further weakness.
Downbeat forecasts from Amazon and Intel also contributed to the market selloff on Friday, with the
Nasdaq was set to plunge into a correction, falling more than 10% from its July peak.
Source Agencies
