Stock Selloff Deepens on Weak Jobs as Bonds Rally – US Market Wrap

The stock selloff accelerated, and bond yields fell, as a weak jobs report fuelled concerns that the Federal Reserve’s decision to keep interest rates at a two-decade high risks a deeper economic slowdown.

These fears roiled trading around the world, causing a massive increase in volatility and a flight away from the riskier parts of the market. The S&P 500 experienced its worst two-day slide since March 2023. A drop in key technology companies caused the Nasdaq 100 to fall 10% from its peak, meeting the definition of a “correction.” Treasuries rallied for the seventh day in a row, with traders expecting the Fed to cut interest rates by a full percentage point in 2024.

The rout in equities follows a torrid advance, partly driven by bets on a “soft economic landing” that would continue driving Corporate America. While the Fed has successfully reduced inflation, the most recent job figures may give officials reason to believe their policies are cooling the labour market too much.

Wall Street behemoths such as Citigroup and JPMorgan are now calling for more aggressive Fed action. Chicago Fed President Austan Goolsbee told Bloomberg Television that officials will not overreact to any single piece of data, echoing Jerome Powell’s comments from Wednesday.