Huge Weekly Selloff – US Market Wrap

Stocks suffered their worst weekly selloff since March 2023 and bonds whipsawed after another disappointing report on the US labor market revived concerns the economy is cooling and the Federal Reserve is moving too slow to rescue it.

The S&P 500 dropped 1.7% and the Nasdaq 100 slumped 2.7% as data showed US payroll additions were 23,000 short of forecasts in August. Treasury two-year yields slipped as much as 15 basis points – before paring the move. At the same time, Wall Street bets on a half-point Fed reduction this month faded again – after briefly gaining momentum when Fed Governor Christopher Waller said he’s “open- minded” about the potential for a bigger cut.

Nonfarm payrolls rose by 142,000 last month, leaving the three-month average at the lowest since mid-2020. The unemployment rate edged down to 4.2%, the first decline in five months, reflecting a reversal in temporary layoffs.

While the reaction to the previous jobs data was worse, it’s the first time since 2012 the S&P 500 saw losses of at least 1.5% for two jobs days in a row.

Treasury 10-year yields were little changed at 3.72%. The dollar wavered. Bitcoin sank 4.5%. Oil and gold retreated.