On September 4, 2024, a trader worked on the trading floor of the New York Stock Exchange (NYSE) in New York City, the United States.
Brendan McDermid | Reuters
This report comes from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open keeps investors updated on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
hybrid work report
U.S. economy There were 142,000 new non-agricultural jobs added in August. That was below Dow Jones’ forecast of 161,000 but better than July’s revised estimate of 86,000. The labor force increased by 120,000 people in August, and the unemployment rate fell to 4.2% from 4.3%.
Stock market plummets
U.S. stocks fell on Friday, Nasdaq Index This week’s closing price fell 2.55%, which is more than 10% higher than the historical closing price. All major stock indexes ended the week lower. The pan-European Stoxx 600 index fell 1.07%. The benchmark index ended the week down 2.5%, its biggest weekly loss in a month.
sinking oil
It’s not just the stock market that’s been underperforming this week. U.S. crude oil prices fell 8% last week, their worst week since June 2023. West Texas Intermediate OilThe October contract hit $67.16 a barrel. Next year won’t be any better: Bank of America cut its oil price forecast to $71 from $75.
Stiglitz and Yellen
Before the employment report was released, Nobel Prize-winning economist Joseph Stiglitz said that the Federal Reserve raised interest rates “too much, too fast” and that a 50 basis point interest rate cut would help inflation and employment. Meanwhile, U.S. Treasury Secretary Janet Yellen assured the public on Saturday that she sees and hopes to continue to see a “good, solid economy.”
(PRO) Bull Lameness
this S&P 500 Index The U.S. economy entered a bull market nearly two years ago on the belief that a soft landing was the ultimate goal for the U.S. economy, CNBC Pro’s Michael Santoli writes. But with the job market weakening rapidly and stock market leaders losing momentum, questions remain about how much impact the upcoming rate cuts will have on the market.
bottom line
What does the market know that we don’t?
Friday, S&P 500 Index Down 1.73% Dow Jones Industrial Average Down 1.01% Nasdaq Index It fell 2.55%, ending the week’s losses for all major U.S. stock indexes.
Large-cap tech stocks were among the worst performers. The names behind much of this year’s rally— NVIDIA, letter, Amazon –It fell about 4% on Friday alone.
If market movements are a barometer of the health of the economy, we’re facing some bad times ahead.
However, this is a very big “if”. The market is not so much an Excel formula as Word’s often random autocomplete suggestions.
We do know from hard data that the U.S. economy, while not doing too well, is not as bad as the stock market is suggesting.
The number of new jobs created in August was significantly higher than in July, and the unemployment rate fell. Yes, the headline number was lower than expected. But it broke a downward trend since May and suggested the U.S. job market was not headed in the wrong direction.
Of course, jobs reports focus on the past, while markets predict the future. However, according to the forecast of the futures market itself, the probability of a 25-point interest rate cut in September is 65%, and the probability of a 50-point interest rate cut is only 35%. CME FedWatch Tool.
This means that economic conditions are not bad enough that the Federal Reserve will be forced to cut interest rates significantly. Beyond that, there haven’t been any specific news or earnings reports affecting the fundamentals of the big tech companies.
farther, Goldman Sachs The Atlanta Federal Reserve recently raised its third-quarter GDP forecast.
Emily Rowland, co-chief investment strategist at John Hancock Investment Management, said the downbeat week for stocks appeared to be “an emotion-driven move, driven in large part by growth concerns.”
Sometimes emotions tell us things that our gut knows but our brain doesn’t. Other times, we need to teach ourselves that reason and sensibility are often at odds with emotion.
– CNBC’s Jeff Cox, Sam Meredith, Samantha Subin and Pia Singh contributed to this article.
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