Sea of Red After NFP

Sea of Red After NFP

Bears appeared to be in full force today and took advantage of weakening economic indicators, with the S&P 500 suffering its worst week since March 2023 and the Nasdaq 100 having its steepest decline since 2022. The S&P 500 heatmap shows a largely red landscape, especially with the technology sector underperforming.

This morning’s nonfarm payrolls report was highly anticipated, viewed by investors as a key factor in predicting whether the Federal Reserve will opt for a 25 or 50 basis point rate cut on September 18th. Payrolls rose by 142,000 in August, up from July's 89,000 but below analysts’ forecast of 161,000. Additionally, July’s numbers were revised down by 25,000, and June’s data was lowered by 61,000.

Average hourly wages increased by 0.40% month-on-month and 3.80% year-on-year, surpassing expectations by 10 basis points in both cases. The average number of hours worked also inched up to 34.30. The unemployment rate ticked down to 4.2% when rounded, though the actual decrease was slight, from 4.25% to 4.22%.

This data signals that the U.S. labor market is continuing to soften, with the economic risks now outweighing concerns about inflation picking up again. The question remains whether these economic risks are significant enough for the Fed to justify a 50 basis point cut instead of 25.

These are today's closing prices: