US stocks wobble as Wall Street wrangles with whether job market is too weak
Hopes that weak employment data would spur the Fed to cut interest rates were balanced by fears that an economic downturn is looming
US stocks wobbled lower on Friday as Wall Street questioned whether the US job market has slowed by just enough to get the Federal Reserve to cut interest rates to help the economy, or by so much that a downturn may be on the way.
After rising to an early gain, the S&P 500 erased it and fell 0.3 per cent below the all-time high it set the day before. The Dow Jones Industrial Average dropped 220 points, or 0.5 per cent, after swinging between an early gain of nearly 150 points and a loss of 400. The Nasdaq composite edged down by less than 0.1 per cent.
The action was more decisive in the bond market, where Treasury yields tumbled after a report from the Labour Department said US employers hired fewer workers in August than economists expected. The government also said that earlier estimates for June and July overstated hiring by 21,000 jobs.
The disappointing numbers follow last month’s discouraging jobs update, along with other lacklustre reports in intervening weeks, and traders are now betting on a 100 per cent probability that the Fed will cut its main interest rate at its next meeting on September 17, according to data from CME Group.
Investors love such cuts because they can give a kick-start to the economy, but the Fed has held off on them because they can also give inflation more fuel.
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So far this year, the Fed has been more worried about the potential of inflation worsening because of US President Donald Trump’s tariffs than about the job market.