Stocks post worst weekly decline since March 2023 after August jobs report

• US stocks fell sharply on Friday after a weak August jobs report raised recession fears.

• The S&P 500 had its worst week since March 2023, falling about 4%.

• The Federal Reserve is expected to cut interest rates by 25 basis points at its September 18 meeting.

US stocks fell sharply on Friday after a weaker-than-expected August jobs report sparked fresh fears of a recession.

The S&P 500 ended its worst week since March 2023, falling about 4% for the week, while the Nasdaq 100 fell nearly 6%.

The U.S. economy added 142,000 jobs in August, below the average economist estimate of 164,000. The unemployment rate fell to 4.2% from 4.3%.

While the jobs report was not as worrisome as July’s reading, which saw an unexpected rise in the unemployment rate, it did point to a cooling labor market and the need for the Federal Reserve to cut interest rates at its policy meeting on 18 September.

New York Fed President John Williams said in a speech on Friday that it was time to cut rates.

“Now is the time to reduce the degree of tightness in the policy stance by reducing the target range for the federal funds rate,” Williams said.

The market expects a 25-basis-point interest rate cut from the Fed later this month, according to CME’s FedWatch tool. Earlier in the day it was between 25 and 50 basis points.

The August report shows decisively how the US labor market has weakened in recent months, with the three-month moving average of monthly job gains falling from just under 270,000 in March to just over 110,000 in August.

JPMorgan wrote following the report that the data pointed to “diminishing strength” in the labor market and should prompt a bigger cut of 50 basis points from the Fed at its next meeting.

But last week’s stock market weakness is typical, according to Fundstrat’s Tom Lee, who sees the decline as timely given September’s weak seasonality.

“While we are cautious about the next 8 weeks, for us the stock is at the lower end of the range and we see more upside than downside,” Lee told clients in a note on Friday.

Analysts at Ned Davis Research echoed his sentiment, saying the September selloff was finally a buying opportunity as the stock market neared its best three-month stretch of the year.

Here’s where US indices stood at the closing bell at 4pm on Friday:

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Here’s what else happened on Friday:

In commodities, bonds and crypto:

• West Texas Intermediate crude fell 1.55% to $68.08 a barrel. Brent crude, the international benchmark, fell 1.83 percent to $71.36 a barrel.

• Gold fell 0.82% to $2,522.20 an ounce.

• The 10-year Treasury yield fell 1 basis point to 3.719%.

• Bitcoin fell 4.48% to $53,651.

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