U.S. stocks wrapped up a turbulent week with sharp losses, as investors weighed a softer-than-expected jobs report against rising hopes for a more aggressive interest rate cut.
The Nasdaq Composite (^IXIC) took the hardest hit, plunging over 2.5%, while the S&P 500 (^GSPC) shed 1.7%, and the Dow Jones Industrial Average (^DJI) dipped 1%.
For the Nasdaq, this marked its worst week since June 2022, and for the S&P, the most difficult stretch since March of this year.
Investors remain cautious as the economy shows signs of cooling.
August’s jobs report revealed the U.S. economy added 142,000 jobs—below the expected 165,000.
Adding to concerns, the previous month’s numbers were revised downward, indicating a weakening labor market.
Unemployment, however, ticked back down to 4.2%, offering some reassurance.
This shift in job growth sharpened expectations for a bold move by the Federal Reserve at its upcoming meeting.
The CME FedWatch tool now shows a 50% chance of a 50 basis point cut, a significant increase from earlier predictions.
Fed Governor Chris Waller reiterated Fed Chair Jerome Powell’s recent remarks, saying the “time has come” for rate cuts.
Waller noted that if the data justifies it, cuts could happen at consecutive meetings.
Meanwhile, tech stocks suffered, with Broadcom (AVGO) dropping over 10% after issuing a weaker-than-expected sales forecast.
Despite benefiting from the surge in AI-related spending, the chipmaker’s other divisions underperformed, which dragged down other chip stocks, including Nvidia (NVDA), which fell around 4%.
In the business world, where technology has long been the star performer, this week showed that even the brightest sectors can face setbacks.
As markets fluctuate, all eyes remain on the Federal Reserve’s next move.
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