US stocks plunge and Treasuries rise as weak jobs data adds to recession fears
Always up to date information for free
Just sign up to Share myFT Digest — delivered directly to your inbox.
U.S. stocks fell and Treasury bonds rose on Friday after weaker-than-expected payrolls data added to investor concerns about the possibility of an economic recession.
Wall Street’s benchmark S&P 500 index fell 1.7 percent, while the tech-heavy Nasdaq Composite lost 2.6 percent.
Top Federal Reserve officials have added to the cautious mood with comments that left open the possibility of a half-point interest rate cut. Governors Christopher Waller and John Williams of the New York Fed have endorsed a series of rate cuts this year due to falling inflation and a weak U.S. labor market.
The yield on the rate-sensitive 2-year Treasury note fell 0.08 percentage point to 3.68 percent, while the yield on the benchmark 10-year note fell 0.04 percentage point to 3.7 percent. Yields move inversely to prices.
Government debt had earlier risen further after weaker-than-expected August payrolls data added to investors’ concerns that US economy is cooling faster than expected. U.S. employers added 142,000 jobs in August, below analysts’ consensus forecast of 160,000, though still higher than the downwardly revised 89,000 jobs created in July. Still, the unemployment rate fell to 4.2 percent.
The dollar index, which tracks the U.S. currency against a basket of other currencies, edged higher, up 0.2 percent, having initially fallen after the data. The yen hit 142.4 per dollar, its highest since January.
Futures markets said on Friday that traders had reduced bets on a 50 basis point cut after the payrolls report, but expectations were broadly mixed. The swaps market was pricing in nearly four and a half quarter-point cuts by year-end, slightly more than before the data.
Fed Chairman Jay Powell said last month he was focused on the risks of a weaker labor market, warning that the timing and pace of rate cuts would depend on economic data.
European stock markets were also mixed following the jobs report. The Stoxx Europe 600 closed down 1.1 percent, as did the Cac 40 in Paris. The FTSE 100 in London fell 0.7 percent and the Dax in Germany closed down 1.5 percent.
Japan’s Topix index closed down 0.9 percent on Friday, while South Korea’s Kospi index fell 1.2 cents and China’s CSI 300 index fell 0.8 percent.
“Risk appetite is more focused on US data… given the slowdown in Chinese growth,” said Trinh Nguyen, senior economist for emerging Asia at Natixis in Hong Kong.
“The market will need reassurance that the US economy is not too slow but at the same time weak enough that the Fed is not worried. [an] inflation resurgence.”
Crude oil futures gave up early gains to hit their lowest level of the year, even after OPEC+ members agreed late Thursday delay planned production increase for at least two months. Brent, the international benchmark, lost 2.5 percent to $70.90 while West Texas Intermediate, its U.S. counterpart, fell 2.6 percent to $67.37.
