Joey Solitro
Stocks ticked higher at Friday's open but quickly reversed lower after the August jobs report ramped up worries about a cooling labor market. At the end of the day, the three main indexes were solidly in the red, with the S&P 500 wrapping up its worst week since March 2023.
Specifically, the broad-market index slumped 1.7% to 5,408, finishing 4.3% lower on the week. The tech-heavy Nasdaq Composite fell 2.6% to 16,690, bringing its weekly loss to 5.8%, while the blue chip Dow Jones Industrial Average closed 1% lower today at 40,345 and ended 2.9% down for the week.
Sparking today's selloff was this morning's release of the August jobs report. According to the Bureau of Labor Statistics, the U.S. added 142,000 new jobs last month, falling far short of the 165,000 jobs economists' anticipated. Additionally, the June and July jobs reports were downwardly revised by a combined 86,000.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The data also showed the unemployment rate, which is derived from a separate survey, slipped to 4.2% from 4.3% in the month prior.
While the August jobs numbers are an improvement over July, they still show the broader trend in the labor market is lower, says Adam Hetts, global head of multi-asset at Janus Henderson Investors. "Overall, the report stays within the range of a slowing but not slow economy and doesn't outright threaten the soft landing narrative nor scream 50 basis points (0.50%) in September cuts."
Indeed, according to CME Group's FedWatch Tool, futures traders are now pricing in a 71% chance the Fed will cut interest rates by a quarter-percentage point at its September meeting, up from 60% one day ago. Odds of a half-percentage-point cut fell to 29% from Thursday's 40% probability.
Broadcom sinks on disappointing outlook
It wasn't only the jobs report that weighed on sentiment. A continued slump in tech shares also had a notable impact on Friday's price action.
Broadcom (AVGO) was a main contributor to the tech sector's slide, with the shares falling 10.4% after the chipmaker reported earnings. While AVGO beat top- and bottom-line expectations for its fiscal third quarter, it issued an outlook for its fiscal fourth quarter that was just shy of what analysts are anticipating.
Wall Street remains upbeat toward the tech stock, though. "We believe AVGO has one of the most strategically and financially attractive business models in semiconductors," says Oppenheimer analyst Rick Schafer. In addition to his Outperform (Buy) rating on AVGO, Schafer says that Broadcom remains a top AI play as its data center AI networking and custom compute portfolio support "snowballing AI growth."
Nvidia narrowly avoids worst weekly performance in years
Broadcom's negative earnings reaction pressured other semiconductor stocks, including Advanced Micro Devices (AMD, -3.7%) and Micron Technology (MU, -3.4%).
Additionally, Nvidia (NVDA) slid 4.1%, bringing its weekly loss to 13.9%. The chip stock was able to avoid suffering its worst weekly loss since September 2022, when it tumbled 16.1%, though this was its worst week of 2024 so far.
That's hardly a reason to panic, and could even represent more attractive entry points, bulls argue. To be sure, Nvidia is facing near-term headwinds, including the delayed delivery of its Blackwell chip, a potential Department of Justice probe and weak seasonality, says BofA Securities analyst Vivek Arya (Buy). But then these could also offer enhanced buying opportunities, the analyst adds.
UiPath keeps tumbling after earnings
UiPath (PATH) stock reversed lower Friday, ending the day down 6.0%, even after the robotic process automation company's beat-and-raise quarter.
PATH "is the defining pure-play software supplier in robotic process automation and exerts a market leadership position," says Oppenheimer analyst Brian Schwartz (Neutral, the equivalent of a Hold). "However, execution has been inconsistent and the business is in transition. We believe shares are fairly valued at current levels, and we would wait on the sidelines for a better entry point."
Apple hit by broad-market headwinds ahead of Monday's event
Apple (AAPL) stock succumbed to broad-market headwinds ahead of next week's September product event, falling 0.7%. Several big announcements are expected from the tech giant, including the launch of the highly anticipated iPhone 16 series.
Wedbush analyst Daniel Ives (Buy) thinks the September Apple event "will kick off Cupertino's biggest upgrade cycle in its history with AI now on the doorstep." Ives adds that recent checks across the Asia supply chain indicate "that this iPhone upgrade cycle could be a historical one, setting the stage for a supercycle."
He estimates that around 300 million iPhones globally are overdue for an upgrade. "In our view, Apple could sell north of 240 million iPhone units in fiscal 2025 as this AI-driven upgrade cycle takes hold."
Related content
- Earnings Calendar and Analysis for This Week
- When Is the Next Fed Meeting?
- When Is the Next Jobs Report?
-
The 'Vinyl Rule' of Retirement: Plan for Two Sides in Your Next ActBecause “Life is what happens when you’re busy making other plans.”
-
Five Destinations for Active and Chill Travelers AlikeWhether you reach for a paddleboard or a lounge chair, find your groove in a location that offers something for both kinds of travelers.
-
I'm a Financial Planner: Here Are Five Phases of Retirement Planning You Have to Get RightA solid retirement plan is a must, but you can't go halfway. Neglecting just one area of your plan could cause the whole thing to collapse.
-
An IRS Enrolled Agent's Top 10 Reasons to Stop Doing Your Own TaxesTaxes can get complicated quickly, and the more money you have, the tougher they tend to be. So, if you have any of these 10 tax situations, don't risk it.
-
Stocks Slip as Job Growth Stalls: Stock Market TodayThe August jobs report came in much weaker than expected, while the unemployment rate ticked higher.
-
Dismal August Jobs Report Offers Rate-Cut Relief: What the Experts Are SayingThe August jobs report came in much lower than expected, lifting the odds that several rate cuts will come through by year's end.
-
Greed, Fear and Market Volatility: A Financial Adviser's Guide to Keeping Emotions Out of Investment DecisionsDon't panic! And don't be so confident in the stock market that you overlook risk. Instead, be logical. Your retirement security could depend on it.
-
Want a Financial Adviser Who Shares Your Faith? Look for One With a CKA DesignationFinancial professionals with a Certified Kingdom Advisor certification are committed to integrating biblical principles with sound financial advice.
-
S&P 500 Hits New High on Jobs Friday Eve: Stock Market TodayThe S&P 500 hit a new all-time closing high and most of the stocks in the Dow Jones Industrial Average were up the day before a critical jobs report.
-
SPACs, SMRs and How to Invest in the Nuclear InsurgencyBig nuclear deployments are in process, but small modular reactors could be a better way to meet rapidly rising electric power demand.
