The S&P 500 dropped Friday and headed for its worst week since March 2023, as investors assessed the fallout from a weak August jobs report and ditched leading technology stocks.
The broad index slid 1.7%, while the Nasdaq Composite shed 2.4%. The Dow Jones Industrial Average fell 405 points, or 1%.
“It’s a sentiment-driven move that’s largely driven by growth concerns,” said Emily Roland, John Hancock Investment Management co-chief investment strategist.
“The market’s oscillating between this idea of is bad news bad news, or is bad news good news, and the sense that it may revive hopes that the Fed moves more aggressively than markets anticipate.”
Megacap tech stocks tumbled as investors dumped risk assets amid mounting worries about the health of the U.S. economy.
Amazon and Alphabet slumped more than 3%, while Microsoft and Meta Platforms lost more than 1%. Broadcom shed 9% on lackluster current-quarter guidance. Other semiconductors fell in sympathy, with Nvidia, Advanced Micro Devices and Marvell Technology
last down more 4% each. The VanEck Semiconductor ETF declined 4%, on pace for its worst week since March 2020.
Fresh August jobs data added fuel to concerns of a slowing labor market. A bout of weak data has sparked worries about the health of the economy, spooking markets and denting risk appetite in recent weeks.
Nonfarm payrolls grew by 142,000, versus a 161,000 gain expected by economists polled by Dow Jones. However, the unemployment rate edged down to 4.2%, in line with expectations.
“The market in general is looking for direction, and that’s going to come from the Federal Reserve,” said Charles Ashley, portfolio manager at Catalyst Capital Advisors.
Investors widely expect the Fed to cut rates by at least a quarter-percentage point at the conclusion of its policy meeting later this month, but softening labor market trends have boosted bets that the central bank could go bigger.
Traders are split nearly 50-50 on whether the Fed will cut by a quarter- or half-percentage point, according to CME Group FedWatch tool.
Friday’s data print comes on the heels of a rocky week for equity markets. The S&P 500 is on pace for a 4.1% decline and its worst week of the year, while the Nasdaq is down 5.5% and headed for its worst week since April. The 30-stock Dow has slumped 2.8%.
