The stock market faced a turbulent session on Friday, marking the worst week for the S&P 500 since March 2023 and the most significant weekly decline for the Nasdaq since 2022. Investor sentiments wavered as markets processed the implications of a weaker-than-expected August jobs report and the broader health of the U.S. economy. The S&P 500 fell 1.73% to close at 5,408.42, while the Nasdaq dropped 2.55% to 16,690.83.
The Dow Jones Industrial Average declined by 410.34 points, or 1.01%, ending the day at 40,345.41. Major tech stocks were hit hard, with shares of several leading semiconductor companies plunging. Emily Roland, co-chief investment strategist at John Hancock Investment Management, commented, “It’s a sentiment-driven move largely influenced by growth concerns.
The market’s oscillating between the notion of whether bad news is indeed bad or if it could lead to more aggressive measures by the Federal Reserve.”
Megacap tech stocks experienced substantial losses as investors grew increasingly wary of the economic outlook. Apple and other major tech players saw significant declines amid these concerns. Fresh economic data added to the market’s anxiety.
August’s nonfarm payroll growth was below the anticipated 161,000, leading to fears of a slowing labor market. However, the unemployment rate edged down to 4.2%, aligning with expectations.
Stocks face significant weekly decline
Charles Ashley, portfolio manager at Catalyst Capital Advisors, stated, “The market is looking for direction, and that’s expected to come from the Federal Reserve.” Investors are currently divided on whether the Fed will implement a quarter- or half-percentage point rate cut later this month. The week concluded with significant market volatility. The S&P 500 registered a 4.3% decline for the week, the Nasdaq fell by 5.8%, and the Dow slumped by 2.9%.
In other market news, U.S. crude oil prices fell to their lowest level since June 2023, posting the worst week in nearly a year. As global demand dynamics shift, notably with China rapidly transitioning to electric vehicles, concerns about oil demand continue to grow. Brokerage firms, including Charles Schwab, addressed technical issues that marred trading earlier in August, promising steps to prevent future disruptions.
A Schwab spokesperson said, “We sincerely apologize,” noting they conduct rigorous reviews to ensure system reliability. On a different note, international equities have been outperforming U.S. stocks, highlighted by strength in European, Canadian, and U.K. markets. Jeffrey Kleintop, global investment strategist at Charles Schwab, suggested investors look at international stocks when diversifying portfolios, particularly given their current performance.
Goldman Sachs’ chief economist Jan Hatzius forecasted that the Federal Reserve would lower interest rates by 25 basis points at its upcoming September meeting, likely followed by two additional cuts of the same magnitude by year’s end. As the market adjusts to these economic signals, investor focus remains on the Federal Reserve’s upcoming decisions and their implications for future economic stability.
