Stocks Open Higher on August Jobs Report
US stocks opened higher on Friday as investors reacted to the August jobs report. The data offered insight into the state of the economy and the Federal Reserve’s potential rate cut later this month.
The Nasdaq Composite (^IXIC) reversed early losses, gaining 0.2% in morning trading. Both the S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) also rose by 0.2%, reflecting a broad market rebound.
Jobs Growth Slows in August
In August, the US economy added 142,000 jobs, falling short of expectations for 165,000. The slower job growth indicated a cooling labor market, raising concerns about economic resilience. However, the unemployment rate dipped back to 4.2%, signaling some strength.
Revisions to previous months’ job figures further supported the notion of a slowing labor market. This combination of data has shifted market expectations regarding the Federal Reserve’s next move.
Fed Rate Cut Expectations Rise
As a result of the weaker-than-expected jobs report, attention has turned to the Federal Reserve’s upcoming meeting. According to the CME FedWatch tool, traders now see a 50-50 chance of a 50-basis-point interest rate cut. This marks a significant shift from earlier in the week when the odds of such a large cut were much lower.
Despite the potential for a sizable rate cut, the market remains cautious. Stocks have experienced volatility throughout the week as investors attempt to gauge the Fed’s strategy. Nevertheless, Friday’s rally offers some optimism, though all three major indexes remain on track for weekly losses.
Broadcom Shares Fall on Sales Forecast
In corporate news, chipmaker Broadcom (AVGO) saw its shares drop in early trading. The decline followed a lackluster sales forecast that overshadowed the company’s growth in AI-related segments. Although Broadcom is benefiting from the surge in artificial intelligence demand, other parts of its business have struggled to meet expectations.
As a key supplier to Apple, Broadcom’s performance is closely tied to the tech sector’s health. The company’s weaker outlook has contributed to the market’s mixed reaction, even as tech stocks lead the broader market recovery.
Weekly Volatility Continues
Despite Friday’s modest gains, the stock market has been volatile throughout the week. Investors have been whipsawed by economic data releases and shifting Federal Reserve rate expectations. While today’s August jobs report has provided some clarity, uncertainty still lingers.
Looking ahead, the focus will remain on the Federal Reserve’s meeting in less than two weeks. The decision on the rate cut will likely shape market sentiment for the coming months. For now, investors are keeping a close eye on incoming data and corporate earnings reports.
Chart by Trading View
