U.S. Stocks Continue To See Significant Weakness After Early Sell-Off

After moving sharply lower early in the session, stocks continue to see substantial weakness in afternoon trading on Friday. The major averages have all shown significant moves to the downside after turning in mixed performances in the two previous sessions.

The major averages have climbed off their worst levels in recent trading but continue to post steep losses. The Nasdaq is down 381.91 points or 2.2 percent at 16,745.75, the S&P 500 is down 81.84 points or 1.5 percent at 5,421.57 and the Dow is down 316.53 points or 0.8 percent at 40,439.22.

The sell-off on Wall Street comes amid concerns about the outlook for the U.S. economy after the Labor Department released a closely watched report showing employment rose by less than expected in the month of August.

The Labor Department said non-farm payroll employment climbed by 142,000 jobs in August compared to economist estimates for an increase of 160,000 jobs.

The report also said the increases in employment in June in July were downwardly revised to 118,000 jobs and 89,000 jobs, respectively, reflecting a net downward revision of 86,000 jobs.

Meanwhile, the Labor Department said the unemployment rate edged down to 4.2 percent in August from 4.3 percent in July.

The modest decrease, which was in line with estimates, came after the unemployment rate reached its highest level since October 2021.

While the data is seen as increasing the chances of a 50 basis point interest rate cut by the Federal Reserve later this month, traders seem worried the central bank may have waited too long to prevent the economy from slipping into a recession.

“The large downward revision to payroll gains in the prior two months and the continued narrow concentration in payroll advances underscore that the labor market is losing steam rather quickly,” said Nationwide Chief Economist Kathy Bostjancic.

Sector News

Semiconductor stocks continue to turn in some of the market’s worst performances on the day, with the Philadelphia Semiconductor Index plunging by 4.1 percent to its lowest intraday level in almost a month.

Broadcom (AVGO) has helped lead the sector lower, plummeting by 8.6 percent after reporting better than expected fiscal third quarter results but providing disappointing revenue guidance for the current quarter.

Considerable weakness also remains visible among computer hardware stocks, as reflected by the 2.2 percent slump by the NYSE Arca Computer Hardware Index.

The index has also fallen to a nearly one-month intraday low, as Super Micro Computer (SMCI) is posting a steep loss after JPMorgan downgraded its rating on the server producer to Neutral from Overweight.

Gold, financial and retail stocks seeing notable weakness, while housing stocks are among the few groups bucking the downtrend amid optimism about lower interest rates.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan’s Nikkei 225 Index declined 0.7 percent, while China’s Shanghai Composite Index fell by 0.8 percent.

The major European markets have also moved to the downside on the day. While the German DAX Index tumbled by 1.5 percent, the French CAC 40 Index slumped by 1.1 percent and the U.K.’s FTSE 100 Index slid by 0.7 percent.

In the bond market, treasuries have pulled back off their highs of the session but continue to see modest strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.4 basis points at 3.719 percent.