NEW YORK/LONDON Aug 2 (Reuters) – Surprisingly weak U.S.employment data on Friday stoked fears of a recession ahead,prompting investors to dump stocks and turn to safe-haven bonds.
Treasury prices surged, sending yields to multi-month lows.
Friday’s U.S. jobs report showed job growth slowed more thanexpected in July and unemployment increased to 4.3%, pointing topossible weakness in the labor market and greater vulnerabilityto recession.
Markets were already rattled by downbeat earnings updatesfrom Amazon and Intel and Thursday’s softer-than-expected U.S.U.S. factory activity survey in addition to the monthly U.S.non-farm payrolls report, which showed job growth slumped to114,000 new hires in July from 179,000 in June.
The data raised expectations of multiple rate cuts by theFederal Reserve this year, which just this week opted to keeprates unchanged.
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“The jobs data are signaling substantial further progressthat the Federal Reserve made a policy error by not reducing thefed funds rate this week,” said Jamie Cox, managing partner forHarris Financial Group in Richmond, Virginia.
“It’s very possible the Fed alters its inter-meetingcommunications on the balance of risks to remove all doubt abouta September rate cut. “
The Nasdaq Composite lost 417.98 points, or 2.43%,to 16,776.16. The index has fallen more than 10% from its Julyclosing high, confirming it is in a correction after concernsgrew about expensive valuations…
