Written by The Banking Post
Wall Street slipped on Friday despite growing expectations of a Federal Reserve rate cut this month after weak US payrolls data signaled a cooling labor market.
The economy added just 22,000 jobs in August, sharply below analysts’ forecast of 77,000 and well down from July’s 79,000. The figures reinforced bets that the Fed will cut rates by 25 basis points at its policy meeting later this month.
Markets initially cheered the report but quickly reversed course. The S&P 500 closed 0.3% lower, with traders citing profit-taking and worries about slowing growth.
“An initially positive reaction to today’s weak payrolls report has given way to some classic ‘buy the rumor, sell the fact’ action,” said Chris Beauchamp, chief market analyst at IG.
The data also dragged down the dollar and US Treasury yields, while gold surged to a record high as investors sought safe havens.
Oxford Economics moved up its forecast for a Fed rate cut to September from December. But analysts warned of risks ahead. “We don’t know how much longer this slowing of hiring is going to last,” said Art Hogan of B. Riley Wealth Management.
Global markets echoed the caution. European shares ended lower, while Tokyo gained after President Donald Trump signed an order to cut tariffs on Japanese autos to 15% from 27.5%.
Oil extended losses, tumbling more than 12% this year as OPEC+ producers move to unwind supply cuts.
In corporate news, Tesla shares rose 3.6% after its board proposed a pay package for CEO Elon Musk that could top $1 trillion if performance milestones are met.
