Despite Labor Day starting off the week, bright red was seen amongst major indices like the Nasdaq (IXIC), the S&P 500 (GSPC), and the Dow Jones Industrial Average (DJI). This is a sharp decline not just for the week, but for the year.
The Nasdaq has not performed this poorly since June of 2022, dropping around 2.5% this week. Similarly, the S&P hasn’t performed this poorly since March of 2023, dropping around 1.7% this week. Lastly, the Dow dropped about 1% this week. Investors believe this is because there were fewer jobs added than expected this August, and this could change how the Fed perceives the need for potential interest rate cuts in the future.
The market reacted with volatility this week to the August labor report. It wasn’t so much that there was a sense of emergency within the markets, but rather there was a rise of the unknown. Most investors want the Federal Reserve to act aggressively with the potential upcoming interest rate cut.
Being in a sharp decline this week, the market needs some direction, and the Fed seems to be the most likely to give that direction. The interest rate cut is expected to be about a quarter to a half a percent. This will be determined in a meeting later this month by the Federal Reserve.
Being that a lot of sell offs happened this week causing that sea of red, the market is in a tough spot. Investors will be looking at the job market in the following months and closely monitoring for trends.
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