Stock Market Today: Dow Dives 410 Points After August Jobs Miss
A big slump in tech stocks thanks to Broadcom's post-earnings slide put pressure on the main indexes too.
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.
Sign up for Kiplinger’s Free E-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?
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at Schaeffer's Investment Research. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.
- Joey SolitroContributor
-
When Does a Nest Egg Become a Ticking Tax Bomb?
Retirement savers with big bucks in traditional IRAs and pretax 401(k)s could face huge tax bills when RMDs kick in. One potential solution? A Roth 401(k).
By Dan Flanagan, CPA/PFS, CFP®, AEP® Published
-
Medicare or Medicare Advantage: Which Is Right for You?
From overall costs to availability of care, here's what to know about the differences between traditional Medicare and Medicare Advantage plans.
By Paola Bianchi Delp Published
-
Medicare or Medicare Advantage: Which Is Right for You?
From overall costs to availability of care, here's what to know about the differences between traditional Medicare and Medicare Advantage plans.
By Paola Bianchi Delp Published
-
Wealth Is More Than Just Your Money: How to Manage It All
In addition to handling your financial wealth, consider ways to manage your non-financial assets: health, knowledge, time and relationships.
By Jennifer Wines, JD, CPWA® Published
-
Stock Market Today: Stocks Hit Fresh Highs on Bank Earnings, Econ News
Strong corporate profits and benign economic data once again sent equities to record levels.
By Dan Burrows Published
-
You're 60 Years Old With $1 Million Saved: Can You Retire?
The answer depends on several factors. The key is to create a plan that combines all aspects of retirement — income, taxes, health care and legacy planning.
By Joe F. Schmitz Jr., CFP®, ChFC® Published
-
Are You a Danger When You Drive?
You might be shaking your head no, but read on for the five things that most of us have at some point done, or are doing, that could cause an accident.
By Karl Susman, CPCU, LUTCF, CIC, CSFP, CFS, CPIA, AAI-M, PLCS Published
-
Stock Market Today: Markets Slip on Hot Inflation Print, Layoff News
Economic data continues to complicate expectations for Federal Reserve rate cuts.
By Dan Burrows Published
-
CPI Report Points to Gradual Pace for Rate Cuts: What the Experts Are Saying
CPI Inflation surprised to the upside last month but the disinflation trend remains on track.
By Dan Burrows Published
-
Come as You Are: Wealth Management for Gen X
Gen X is stuck in the middle of kids and aging parents, but retirement's not far off. Time to prioritize, with help from Nirvana, The Eagles and David Bowie.
By Alvina Lo Published