TLDR
- U.S. economy added only 22,000 jobs in August, far below the expected 75,000, with unemployment rising to 4.3%
- Stock markets reversed early gains and closed lower, with S&P 500 down 0.6% and Dow falling 0.5%
- Federal Reserve rate cuts are now seen as certain for September, with traders pricing in 100% chance of a reduction
- Job market data revisions showed the U.S. created fewer than 30,000 jobs over the past three months
- AI stocks gained momentum with Broadcom jumping 10% on positive outlook and OpenAI chip deal news
U.S. stocks fell on Friday as investors processed disappointing employment data that highlighted growing concerns about economic weakness. The major indices reversed course after starting the day with gains, ending a volatile trading session in negative territory.
The Bureau of Labor Statistics reported that the U.S. economy added just 22,000 jobs in August. This figure fell well short of economist expectations for 75,000 new positions and marked another weak month for job creation.
The unemployment rate increased to 4.3% from the previous month’s 4.2%. This rise adds to mounting evidence that the labor market is cooling rapidly after years of strong growth.
Data revisions paint an even bleaker picture for recent job creation. The revisions to July and June figures show that over the past three months, the economy has generated fewer than 30,000 new jobs total.
The June revision showed a negative print, marking the first month of job losses since 2020. This revision underscores the severity of the labor market’s recent downturn.
Markets React to Economic Data
The S&P 500 closed down 0.6% after hitting an all-time high on Thursday. The Dow Jones Industrial Average fell 0.5%, while the Nasdaq Composite declined 0.4%.
Trading patterns showed initial optimism that gave way to selling pressure. Investors initially viewed the weak data as supportive of Federal Reserve rate cuts but later grew concerned about underlying economic health.
Treasury yields dropped across the board following the jobs report. The 30-year yield fell below 4.79% after approaching 5% earlier in the week, while the benchmark 10-year yield declined to 4.07%.
The yield movements reflect investor expectations for aggressive monetary policy easing. Lower yields typically indicate expectations for reduced interest rates and economic growth concerns.
Federal Reserve Rate Cut Certainty
Traders now price in a 100% probability of a Federal Reserve rate cut at the September meeting. This represents increased certainty compared to earlier in the week when some doubt remained about policy action.
Betting markets show growing expectations for a larger 50-basis-point reduction rather than the traditional 25-basis-point cut. The weak jobs data has strengthened arguments for more aggressive monetary stimulus.
President Trump criticized Fed Chair Jerome Powell on social media following the report. Trump wrote that Powell should have lowered rates long ago and called him “Too Late” in his policy response.
The criticism comes as the White House pushes to reshape Fed leadership. A Senate hearing this week considered Trump’s pick Stephen Miran for Fed governor as part of broader efforts to influence monetary policy.
Broadcom shares surged over 10% on an upbeat business outlook and reports of a deal to build OpenAI’s first custom chips. Tesla stock also gained after the board proposed paying CEO Elon Musk $1 trillion in compensation tied to performance targets.
Final Thoughts
Stocks fell today as the weak August jobs report created a complex market dynamic. While investors initially welcomed the data as fuel for Fed rate cuts, concerns about economic health ultimately drove selling pressure. The combination of missed job creation expectations, rising unemployment, and historical September market weakness contributed to the broad-based decline across major indices.
