Economy
All eyes were on the labor market this week as we got some fresh data. On Wednesday, the Labor Department released its July data which showed the number of job openings is at its lowest point since January 2021. Then on Thursday, ADP's private payrolls report showed the smallest gain in new payrolls in three and a half years as well. Finally, Friday's jobs report for the month of August showed the economy added fewer jobs than expected. This trifecta of negative jobs data suggests a weakening labor force and a slowing economy. While we are seeing less demand from employers for new positions, we have not (yet) seen an significant uptick in layoffs as the unemployment rate moved down from 4.3% to 4.2% last month, and the number of weekly claims for unemployment insurance has been relatively stable. However, with the Fed's first rate cut expected to happen in less than 2 weeks, the chances of a 0.5% cut vs. a 0.25% cut have risen after this week.
Markets
Not too much positive to say about the stock market this week as the S&P 500 fell 4.25% in a holiday-shortened week. This was the worst week for the market since March 2023 as stocks reacted to the labor market data and the prospects of an economic slowdown. The tech-heavy Nasdaq bore the brunt of the selloff, falling nearly 6%. Nvidia, which recently reported earnings, now finds itself about 25% below it's most recent high, having lost more than $800 billion in market cap since mid-July. The S&P 500 has been in a drawdown since July 16, and we're about 4.5% away from the high water mark for the index. We won't have much in the way of corporate earnings reports out for the next several weeks, so stocks may be reacting both to economic reports and the Fed's big decision on the 18th of this month.
What We're Reading
Have a great weekend.
Dogwood Wealth Management