US Stocks Fall After Weak Jobs Numbers – Dow Down 0.5%
US stock indices fell in trading on Friday after key jobs numbers came in under expectations, increasing the likelihood of more Fed interest rate cuts in the coming months. The Dow dropped 0.48% to 45,400, the S&P lost 0.32% to 6,481, and the Nasdaq edged just 0.03% lower to 21,700. Treasury yields hit fresh lows, with the 2-year down 7.9 basis points to 3.509% and the benchmark 10-year losing 8.6 basis points to 4.074%. The dollar took a hard hit, with the DXY losing 0.62% to trade down to 97.72. Oil prices dropped further with news that OPEC+ will increase production, with Brent down 2.22% to $65.50 and WTI down 2.54% to $61.87 a barrel. Gold pushed higher again on the back of the weaker dollar, up to an all-time high close, gaining 1.15% by the New York close to finish at $3,586.69.
Investors Now Looking for 3 Fed Rate Cuts by Year-End
Non-farm payroll data showed that only 22,000 jobs were created in August, much lower than the expected 75k print, and the unemployment rate crept up to 4.3%, sending expectations of Federal Reserve rate cuts soaring. The market is now pricing in a 71% chance of 50 basis points of cuts occurring at the October meeting and a 65% chance of 75 basis points at the final meeting of the year on 10 December, up 25% from just a week ago. The uncertainty now comes from some market participants as to whether they see those anticipated cuts as a positive for the market, or if they focus harder on the data – which has sharply declined in the last few months – and look for more defensive positioning ahead. US stocks lost ground on Friday, which may suggest that more of the market is leaning towards the latter view, which could lead to some corrections off recent all-time highs in the coming weeks.
Quiet Start to a Big Week for Financial Markets
There is very little on the macroeconomic calendar today to shift the dial for traders; however, many are expecting to see more big moves across financial markets as investors digest the raft of updates from last week that culminated in another weaker-than-expected NFP print on Friday. There will be a sharp focus on Japanese markets during the Asian session, with rumours that Prime Minister Shigeru Ishiba plans to resign in the coming days hitting the newswires over the weekend. GDP data is also set to be released, but expect political updates to add more volatility to the yen on the open and over the coming days. The London and New York sessions are bereft of any major data releases or central bank updates, but Friday’s US data is expected to continue weighing on sentiment.
