U.S. stocks closed lower on Friday, forcing all three major indexes to register the largest weekly percentage losses in years, after a weak jobs report kept investors questioning how much the Federal Reserve would lower interest rates in coming weeks.
For the week, the S&P 500 lost 4.25% and the Dow fell 2.93%. Both were their largest weekly percentage losses since March 2023. The Nasdaq declined 5.77% for the week, which was the biggest weekly percentage loss since January 2022.
U.S. employers added a disappointing 142,000 jobs in August, below Bloomberg’s consensus estimate of 163,000 jobs. July was revised down to 89,000, also below estimates. The unemployment rate edged down to 4.2% from July’s 4.3%.
Slowing jobs growth confirms that the economy is weakening, which almost ensures the Fed will cut rates when it concludes its policy meeting on September 18. However, it also may suggest the Fed’s rate cuts may be too late for the economy to achieve a soft landing, said Lou Basenese, president and chief market strategist at MDB Capital in New York.
“If we start seeing layoffs in the next month or two, it’s going to suggest his timing was too late,” he said.
Bond markets looked forward to rate cuts, with the two-year Treasury yield dropping to the lowest level since 2022.
How big will the Fed’s rate cut be?
Fed Governor Christopher Waller said on Friday “the time has come” for the U.S. central bank to begin a series of interest rate cuts, adding he is open-minded about the…
