Wall Street’s main indexes fell after a crucial jobs report did little to clear the uncertainty around the magnitude of the Federal Reserve’s interest rate cut that is expected at the central bank’s meeting later this month.
A Labor Department report showed US employment increased less than expected in August, but a drop in the jobless rate to 4.2 per cent suggested an orderly labour market slowdown continued.
Traders’ bets for a 25-basis point rate cut in September stood at 53 per cent, according to the CME Group’s FedWatch Tool. Bets for a 50-bps reduction in rates were at 47 per cent, down from a brief rise to 51 per cent after the data.
Rate-sensitive growth stocks were mixed. Apple rose one per cent, while Tesla fell 2.9 per cent and Nvidia lost 1.5 per cent.
“The market is really struggling with this one … it’s in the middle of what could be used as a justification for either a 25- or 50-bps rate cut,” Gennadiy Goldberg, head of US rates strategy at TD Securities, said.
Federal Reserve Bank of New York President John Williams said a better balanced economy has opened the door to cutting rates, with the full course of action to be determined by how the economy performs.
The labour market has come under scrutiny after an unexpected rise in the jobless rate sparked recession fears nearly a month ago and had sent the tech-heavy Nasdaq down more than 10 per cent into correction territory and led to a selloff in global markets.
In early trading on Friday, the Dow Jones Industrial Average fell 27.15 points, or 0.07 per cent, to 40,728.60, the S&P 500 lost 29.02 points, or 0.54 per cent, to 5,473.70 and the Nasdaq Composite lost 171.46 points, or 0.99 per cent, to 16,956.20.
Most of the S&P 500 sectors turned lower, led by a 1.6 per cent drop in tech stocks.
Wall Street’s three main indexes were on track for a weekly loss. The benchmark S&P 500 was on course for a weekly drop of more than two per cent, its steepest decline in nearly five months, led by a more than five per cent fall in technology stocks.
September has been historically weak for US equities, with the S&P 500 down about 1.2 per cent for the month on average since 1928.
Broadcom slid 9.3 per cent after the chipmaker forecast fourth-quarter revenue slightly below estimates, hurt by sluggish spending in its broadband segment.
Other chip stocks such as Marvell Technology dropped three per cent and Advanced Micro Devices shed 1.5 per cent, sending the Philadelphia SE Semiconductor index down nearly two per cent.
The semiconductor index is set for its biggest weekly drop in more than a month.
Super Micro Computer dropped 4.5 per cent after brokerage J.P.Morgan downgraded the AI server maker’s shares to “neutral” from “overweight”.
Declining issues outnumbered advancers for a 1.15-to-1 ratio on the NYSE and a 1.68-to-1 ratio on the Nasdaq.
The S&P 500 posted 14 new 52-week highs and three new lows, while the Nasdaq Composite recorded 19 new highs and 81 new lows.
Source Agencies
