Stock Market Declines as Nonfarm Payroll Report Approaches
Nonfarm Payroll is coming later today and the stock market is mostly down ahead of that report and in anticipation of interest rate cuts.
September is proving to be a tumultuous month for the stock market so far, with lower numbers than what we saw in August. Both the Dow Jones and the S&P 500 ended the day low on Thursday.
The Nasdaq Composite was the outlier with its tech-heavy focus, and the index closed up by 0.25%. This index was bolstered by a 300% increase from Wheeler Real Estate (WHLR) stock after a judge dismissed the suit against them.
Nonfarm payrolls are coming later today on Friday, and the expectation is that there will be a sizable increase from last month’s report of 114,000 new jobs added. For August, analysts anticipate the report to show 160,000 new jobs added. On top of that, unemployment is expected to drop, creating a picture of a strong economy that is ripe for investment opportunities.
Upcoming Interest Rate Cuts
The Federal Reserve will be watching those reports this week and making their decision to cut interest rates based on their observations. They have not announced by how much they will cut the rates, so this new data will likely feed into that and inform their decision.
If the Fed cuts rates sharply, that could be great for consumers in the short term but catastrophic for the investment markets. It could cause severe fallout across the stock market as well as the crypto market.
The fear is that a 50 basis point cut would be too much and that the Fed may overcompensate for not having made any cuts in so long. The Fed should be cutting rates as early as September 17, and the stock markets will likely be in a state of tension until that happens. We are unlikely to see solid numbers from the Fed as to what the rate cut will be ahead of that day.
If the rate cut is high, then that could cause a selloff across the market and tank many stocks for much of September.
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