U.S. benchmark equity indices experienced a decline on Friday, following the release of disappointing job growth figures for August. According to the Bureau of Labor Statistics, nonfarm payrolls increased by only 142,000, which fell short of the consensus estimate of 165,000 derived from a Bloomberg survey.
Moreover, previous months saw downward revisions, with July's payrolls adjusted to an increase of 89,000 and June's reduced to 118,000. This adjustment resulted in a net downward revision totaling 86,000 jobs. This weakened labor market data has significant implications for monetary policy. The probability of a 25-basis-point interest rate cut on September 18 surged to 73% on Friday from 60% the day before, while the chances of a more aggressive 50-basis-point cut decreased to 27% from 40%, as indicated by the CME FedWatch tool.
In light of these developments, New York Fed President John Williams stated that it is 'appropriate' for the Federal Open Market Committee to consider easing its monetary policy. Fed Governor Christopher Waller echoed this sentiment, emphasizing the importance of commencing the easing process later this month. On the commodities front, October West Texas Intermediate crude oil settled down $1.48 at $67.67 per barrel, and November Brent crude also saw a decline of $1.23, closing at $71.45.
These price movements reflect ongoing concerns regarding demand amidst the recently published jobs data. In the technology sector, noteworthy developments were observed. Intel Corporation ($INTC) is exploring the sale of its 88% stake in Mobileye Global ($MBLY), a provider of automated driving systems, according to reports from Bloomberg.
Following this news, shares in Intel dipped by 2.6%. Broadcom Inc. ($AVGO) also faced challenges, experiencing a significant drop of approximately 10% in its share price after the company provided guidance for its fiscal Q4 revenue at around $14 billion, slightly below the analyst forecast of $14.04 billion compiled by Capital IQ.
As the economic landscape evolves, investors should remain vigilant and assess how these factors may influence market behavior and investment strategies moving forward..