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Another rout is hitting Wall Street on Friday<\/a>, and technology stocks are taking the brunt of it after a jobs report billed as the most important of the year\u00a0came in mixed.<\/a><\/p>\n The S&P 500 was 1.6% lower in midday trading and heading for its worst week since March 2023. The Dow Jones Industrial Average<\/a> was down 367 points, or 0.9%, as of 11:55 a.m. Eastern time, after flipping an early gain of 250 points. The Nasdaq<\/a> composite sank 2.4% as Broadcom<\/a>, Nvidia<\/a> and other tech companies led the market lower<\/a> on continued worries that their prices soared too high in the boom around artificial-intelligence tech.<\/p>\n The action was even wilder in the bond market, where Treasury yields tumbled, recovered and then fell again after the jobs report showed U.S. employers hired fewer workers in August than economists expected. It\u2019s the\u00a0second straight month\u00a0where hiring has come in below forecasts, worsening worries after recent data showed\u00a0weakness in manufacturing<\/a>\u00a0and some other areas of the economy.<\/p>\n Such a weakening in the job market is actually just what the Federal Reserve and its chair, Jerome Powell, have been trying to induce in order to\u00a0stifle high inflation<\/a>, \u201cbut only to a certain extent and the data is now testing Chair Powell\u2019s stated limits,\u201d said Scott Wren, senior global market strategist at Wells Fargo<\/a> Investment Institute.<\/p>\n The weaker-than-expected hiring raised questions about how much the Federal Reserve will have to cut its main interest rate by at its meeting later this month.<\/p>\n Powell has already indicated\u00a0the Fed is likely to cut<\/a>\u00a0rates for the first time since the 2020 COVID crash. The Fed wants to protect the job market and\u00a0keep the economy from sliding into a recession<\/a>\u00a0after keeping the federal funds rate at a two-decade high for more than a year.<\/p>\n Such cuts can boost investment prices, particularly if the Fed jumps beyond the traditional-sized move of a quarter of a percentage point. But the worry on Wall Street is that the Fed may be moving too little, too late and that the slowing U.S. economy\u00a0could fall into a recession<\/a>. That would undercut corporate profits and erase the benefits from lower rates.<\/p>\n \u201cAll is not well with the labor market,\u201d said Brian Jacobsen, chief economist at Annex Wealth Management. \u201cThe Fed wanted the labor market to come into better balance, but any balancing act is unstable.\u201d<\/p>\n Still, the jobs report did include some more encouraging data points. For one, the unemployment rate improved to 4.2% from 4.3% a month earlier. That was better than economists expected. And even if August\u2019s hiring was weaker than forecast, it was still better than July\u2019s pace.<\/p>\n Christopher Waller, a member of the Fed\u2019s board of governors,\u00a0said in a speech<\/a>\u00a0after the jobs report\u2019s release that \u201cI believe we should be data dependent, but not overreact to any data point, including the latest data.\u201d<\/p>\n \u201cWhile the labor market has clearly cooled, based on the evidence I see, I do not believe the economy is in a recession or necessarily headed for one soon,\u201d he said.<\/p>\n While Waller said he thinks a \u201cseries of reductions\u201d to rates is appropriate given that a slowing job market now looks like the bigger threat for the economy than high inflation, he also said the ultimate pace and depth of those cuts is still to be determined.<\/p>\n All the uncertainty sent Treasury yields on a wild ride in the bond market as traders tried to handicap the Fed\u2019s next moves.<\/p>\n The two-year Treasury yield initially fell as low as 3.64% after the release of the jobs report, before quickly climbing back above 3.76%. It then dropped back to 3.66% following Waller\u2019s comments, down from 3.74% late Thursday.<\/p>\n The 10-year Treasury yield, which moves more with expectations for longer-term economic growth and inflation, slipped to 3.67% from 3.73% late Thursday. It also swung between gains and losses following the jobs report.<\/p>\n On Wall Street, Broadcom tumbled 9% despite reporting profit and revenue for the latest quarter that were above analysts\u2019 forecasts, thanks in large part to the boom around artificial intelligence. The chip company said it expects to make $14 billion in revenue this quarter, which was slightly below analysts\u2019 expectations of $14.11 billion, according to FactSet.<\/p>\n Other chip companies also fell, including a 5% drop for Nvidia. After soaring earlier this year as its revenue surged due to the AI frenzy, Nvidia\u2019s stock has been shaky since mid-July as investors question whether they took it too high. That\u2019s even though Nvidia has\u00a0continued to top analysts\u2019 expectations<\/a>\u00a0for growth.<\/p>\n Big Tech companies have grown into the market\u2019s most influential after their superstar runs made them even more massive, and Nvidia was Friday\u2019s single heaviest weight on the S&P 500.<\/p>\n The losses were nevertheless widespread, and more than 80% of stocks in the S&P 500 were falling. The smaller stocks in the Russell 2000, whose profits tend to be more closely tied with the strength of the U.S. economy than many big multinationals, fell 1.9%.<\/p>\n On the winning side of Wall Street was U.S. Steel, which rose 5.1% after the CEO of rival Cleveland Cliffs told MSNBC that his company would still be interested in acquiring U.S. Steel if the\u00a0White House were to block its proposed sale to Japan\u2019s Nippon Steel<\/a>. Lourenco Goncalves also accused Nippon of frequent breaches of trade policies and cited national security issues if the proposed $14 billion Nippon-U.S. Steel were to go through.<\/p>\n In stock markets abroad, indexes fell across much of Europe and Asia. Trading was halted in Hong Kong because of a typhoon.<\/p>\n<\/div>\n\nRecommended reading:<\/strong>
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