Dow Jones falls again after NFP numbers miss forecasts

• The Dow Jones fell another 400 points on Friday after the NFP jobs data missed the mark.
• US job additions continue to underperform and negative revisions remain a concern.
• Despite the lack of hiring in NFP, market bets for a 25 bps cut come out on top.

The Dow Jones Industrial Average (DJIA) fell 400 points on Friday after US non-farm payrolls (NFP) came in below expectations, along with a downward revision to previous numbers. The lopsided job growth dropped further signals that the US economy is slowing, but not slow enough to trigger firmer bets on a double rate cut by the Federal Reserve (Fed) later this month.

According to the Bureau of Labor Statistics (BLS), US employment rose by 142,000 in August, less than 160,000 but an improvement from the previous month, which was also revised down to just 89,000 as of press time initial of 114,000. Despite the generally negative tone of the jobs numbers, average hourly earnings in the US rose faster than expected, rising 3.8% from a year ago in August, beating the 3.7% expected and up from 3 .6% from the previous period.

The August NFP jobs report showed a weaker-than-expected increase in hiring for the month, helping keep rate cut bets on hold. However, markets had a hard time seeing where the overall jobs report was headed. The headline number of job additions, despite missing forecasts, was still up from the previous period, but the underlying trend in the jobs report showed that most of these gains in employment came from leisure and hospitality, from health care and social care.

The manufacturing, retail trade and information sectors all posted declines in headline employment numbers, showing warning signs that the US economy is indeed headed for a slowdown. The decline in physical business and manufacturing channeled the Dow Jones, an index that heavily represents physical manufacturing businesses.

Despite the general loss of employment numbers and even more warning signs that investors have good reason to be concerned about a recession brewing in the coming quarters, markets eased back from bets on a double cut in installment on September 18. According to CME Instrument’s FedWatch, rate trades now see a 75% chance of an initial 25bps cut from the Fed this month, with just 25% betting on an initial 50bps rate cut. Shares rebounded from earlier odds this week of a 40-60 split in favor of a double rate cut after markets decided that Friday’s NFP print, while not the biggest, wasn’t the most bad

Dow Jones News

The Dow Jones was all but closed on Friday, with all but five of the board’s listed stocks testing lower to end the trading week. McDonald’s ( MCD ) managed a 1.3% gain to $292.00 a share, with Procter & Gamble ( PG ) climbing half a percent to $176.35 a share.

American Express ( AXP ) fell the hardest on Friday, falling 3.3% to $243.60 a share. The payments and card services company was closely followed by Amazon.com ( AMZN ), which fell about 3.25% to $172.00 per share.

Dow Jones Price Forecast

Friday’s crash put the Dow Jones on a collision course with the 50-day exponential moving average (EMA) at 40,283, with the major index yet another total loss of percentage points off the top. The DJIA is now down 3% in just over a week after hitting a new all-time high of 41,574 just last week.

Despite short-term losses, the Dow continues to trade well on the upper side. Price action should drop another 4.65% before reaching the 200-day EMA at 38,434 and bidders are set to defend the barriers near the major price of 40,000.

Dow Jones Daily Chart