U.S. Stock Market Records Largest Weekly Losses in Years

On Friday, U.S. stocks closed lower, leading all three major indexes to note their biggest weekly percentage losses in years. This decrease was triggered by a disappointing jobs report which left investors pondering over the magnitude of the Federal Reserve’s upcoming interest rate cuts.

Overview of Weekly Losses

Over the week, the S&P 500 fell 4.25% and the Dow declined 2.93%. These were the largest weekly percentage losses since March 2023 for both indexes. Correspondingly, the Nasdaq recorded a 5.77% loss for the week, marking its biggest weekly percentage decline since January 2022.

Impact of Jobs Report on Stocks

In August, U.S. employers added only 142,000 jobs, falling short of Bloomberg’s consensus estimate of 163,000 jobs. Furthermore, job additions in July were revised downwards to 89,000, which was also below the estimated figure. As a result, the unemployment rate moved slightly down to 4.2% from July’s 4.3%.

Future Predictions for the Economy

Experts believe that the slowing jobs growth confirms signs of a weakening economy. This is likely to compel the Federal Reserve to cut rates in their policy meeting scheduled on September 18. However, this may also suggest that the Fed’s rate cuts may be too late to achieve a soft landing for the economy, according to Lou Basenese, president and chief market strategist at MDB Capital in New York.

Fed’s Anticipated Rate Cut

Fed Governor, Christopher Waller, stated on Friday that it’s time for the U.S. central bank to initiate a series of interest rate cuts. However, the size and pace of these cuts are yet to be determined. According to the CME’s Fed watch tool, there’s a 71% chance of a quarter-point cut at the Fed’s next meeting, while the likelihood of a half-point reduction stands at 29%.

Effect of Corporate News on Stock Market

In addition to the impact of job reports and interest rates, corporate news also influenced the stock market. For instance, Broadcom shares fell by 10% following a lower-than-expected fourth-quarter revenue forecast. Similarly, Super Micro Computer saw a 6.87% drop in its stock value after J.P. Morgan analysts downgraded the company’s shares from ‘overweight’ to ‘neutral’.

Contributions to this report were made by Reuters.