US stocks finished lower on Friday after a softer-than-expected US jobs report reignited concerns about the strength of the American economy. While the data bolstered expectations for interest rate cuts from the Federal Reserve, it also cast doubt on whether the slowdown may be more pronounced than investors had anticipated.
The S&P 500 slipped 0.32% to close at 6,481.50. The Nasdaq Composite edged down 0.03% to 21,700.39, while the Dow Jones Industrial Average dropped 220 points, or 0.48%, to 45,400.86. All three major indexes had touched record intraday highs earlier in the session before reversing lower. Despite Friday’s pullback, both the S&P 500 and Nasdaq still posted weekly gains, up 0.33% and 1.14% respectively. The Dow lagged, finishing the week down 0.32%.
Jobs miss raises rate cut expectations
According to the Bureau of Labor Statistics, the US economy added just 22,000 jobs in August, well below the 75,000 expected. The unemployment rate rose to 4.3%, matching forecasts. Economists say the slowdown, paired with moderating wage growth, strengthens the case for a Fed rate cut at its upcoming meeting.
Market pricing now reflects a quarter-point cut as the base case, with traders assigning a 10% chance of a larger half-point move. Analysts say the Fed may feel compelled to act decisively to support growth.
Sector moves and corporate highlights
Financial stocks led declines, with JPMorgan and Wells Fargo sliding on worries a weaker economy could curb lending demand. Industrials Boeing and GE Aerospace also retreated on concerns softer conditions could dampen orders.
Tech was mixed. Broadcom surged nearly 9.5% after reporting stronger-than-expected earnings, raising hopes of broader chip demand. By contrast, Nvidia fell 2.7% as Broadcom’s strength suggested mounting competition in the artificial-intelligence space. Palantir, another AI-linked stock, slipped about 2%.
Australian sharemarket
The weaker US labour market data also shaped expectations for local investors. The SPI futures point to 0.2% fall, but analysts suggest the index remains on track to challenge record highs, supported by the likelihood of easier US monetary policy.
Gold continued its rally, climbing to US$3,586 an ounce and closing in on the US$3,600 mark. The metal has now gained 37% this year, fuelled by safe-haven demand, central bank buying and a softer US dollar.
Investor focus this week will turn to consumer confidence and the NAB Business Survey. Around $723 million in dividends are also due for payment. In the US, key inflation readings, the Producer Price Index on Wednesday and Consumer Price Index on Thursday, are set to guide expectations for the Fed’s next move.
