Stocks React to Labor Market Data
US stocks wobbled on Thursday as investors digested weaker-than-expected labor market data. This influenced both interest-rate cut hopes and concerns about the US economy’s health.
The S&P 500 hovered near the flatline. Meanwhile, the Dow Jones Industrial Average edged up slightly. The tech-heavy Nasdaq Composite slid 0.3%. The major indexes showed little momentum as they continued their sluggish start to September.
Weak Job Growth Stirs Concerns
Private employers posted minimal hiring growth. According to ADP data released Thursday, private payrolls grew by just 99,000. This was the smallest gain since January 2021. It also came in well below economists’ expectations.
In addition, slightly fewer Americans filed for unemployment benefits. Job openings, reported earlier in the week, also slumped. This weak labor data heightened speculation ahead of Friday’s jobs report.
Stocks, Labor Market and Fed Rate Cut Hopes
The recent jobs data fueled debates over Federal Reserve policy. Traders now see a nearly 50-50 chance of a rate cut in September. This data adds to speculation that the Fed may reduce rates by 0.5%.
However, the weak economic readings also raised recession fears. Investors are concerned that the “soft landing” scenario may be slipping away. Still, hopes for deeper rate cuts remain intact.
Earnings Updates from HPE and C3.ai
On the corporate side, earnings from HPE and C3.ai provided insight into the AI sector. C3.ai shares plunged 20%. The company reported weaker-than-expected subscription revenue, disappointing investors. Similarly, HPE’s stock dropped due to concerns over profitability.
Outlook Clouded by Mixed Signal
Overall, the market remains torn between conflicting signals. On one hand, weak labor data could push the Fed toward rate cuts. On the other hand, this could signal deeper economic trouble.
Chart by Trading View
