Wall Street fell sharply on Friday, closing out its worst week since March 2023, pressured by new concerns about the economy after data showed that it created less jobs as expected last month.
In this context the index Dow Jones Industrials fell 1% to 40,345.41 points; S&P500 lost 1.7% (-4.3% in the week) to 5,408.42 points and the Nasdaq Composite depreciated by 2.5% to 16,690.83 points.
Nonfarm payrolls came in below estimates
The US economy added fewer jobs than expected in Augustbut rose from a revised July figure, according to Labor Department data that could influence upcoming Federal Reserve policy decisions.
Nonfarm payrolls were located at 142,000 last month, compared with a sharply revised downward reading of 89,000 in July. Economists had forecast a reading of 164,000, compared with July’s initial mark of 114,000.
Friday’s post also showed that The US unemployment rate stood at 4.2%compared with the July figure of 4.3%, a level that was in line with estimates. Similarly, on a monthly basis, average hourly earnings growth rose 0.4% after contracting 0.1% in July.
“This weakness in the labor market It is enough to give the Fed an excuse to ease monetary policy, but we currently see no signs of recession. that require a significant number of cuts“Jefferies Investment Bank said in a note, reiterating its call for the Fed to cut rates by 25 basis points later this month.
The opinion of a Nobel Prize winner
Nobel Prize-winning economist, Joseph Stiglitzsaid that the Federal Reserve (FED) should lower US interest rates at its next meeting.
In an interview with CNBC, an American subscription television channel on economic news, the Nobel Prize winner in 2001 for his market analysis joined other voices that are also calling for a large rate cut this month.I’ve been criticizing the Federal Reserve for going too far, too fast“, he said.
For the expert It was a mistake to have kept the reference interest rate close to zero for such a long period.“but then they went beyond that and looked at current rate levels, putting the economy at risk with very little benefit, probably worsening inflation, because if you look more closely at the sources of inflation, a major component was housing.“, the economist added.
Fed rates remain between 5.25 and 5.50%, so Faced with the housing shortage problem in the United States and rising inflation, the Nobel Prize winner does not believe that raising rates has helped solve this problemOn the contrary, by increasing them, more barriers would have been created for citizens to access the purchase of housing and for real estate developers to build more projects.
Stiglitz believes that the FED’s standards “must consider the weaknesses of the economy, therefore, It would be appropriate for interest rates to fall”.
Bonds in positive territory, stocks in decline
Meanwhile, the rate-sensitive 2-year Treasury note yield sold off and its 10-year counterpart reversed earlier losses, contributing to a steep slope of the yield curve.
On the contrary, in the equity segment Broadcom shares fell more than 9% in early U.S. trading after the group’s sales forecast for the current quarter slightly missed investors’ expectations. The firm projected it would show $14 billion in revenue in its fourth quarter, just below estimates of $14.04 billion, according to London Stock Exchange Group plc (LSEG) data cited by Reuters. The forecast was seen as a sign of possible sluggishness in the company’s non-AI-related operations.
However, AI segments remained strongBroadcom Corporation said. The firm once again raised its outlook for full-year sales of AI parts and custom chips to $12 billion, up from its previous forecast of more than $11 billion for the period.
Other chip stocks, including the AI darling Nvidia (-3.5%) and its pair Advanced Micro Devices (-3.7%) fell after Broadcom’s report. Marvell Technology (-4.6%) and Micron Technology (-3.3%) also went down from the opening of the wheel).
Besides, UiPath Inc. has posted second-quarter results that beat Wall Street estimates. However, several analysts believe the stock will remain range-bound as more signs of steady execution are needed for investors to become optimistic about the company.
“We continue to believe that PATH is likely to remain range-bound over the medium term and look forward to further signs of stable execution,” Royal Bank of Canada (RBC) said in a note. its shares fell by 6%.
Source: Ambito
