(Bloomberg) — Stocks whipsawed ahead of US jobs data that will be key in determining the size of a Federal Reserve rate cut in September.
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In a session of several twists and turns, the S&P 500 finished lower. That’s despite a rally in a handful of big techs. Treasury yields fell slightly, with traders still pricing in over 100 basis points in Fed easing this year — which implies a potential super-sized reduction. Given Jerome Powell’s recent emphasis on the labor market, many on Wall Street say Friday’s US payrolls will dictate whether the Fed cuts by 25 or 50 basis points this month.
To Steve Sosnick at Interactive Brokers, a “Goldilocks” scenario around consensus – ‘not too hot, not too cold’ – is what equity bulls require.
“The danger in really ‘bad news’ is that even if the Fed is prepared to react aggressively, it might be too late to stave off real economic weakness,” he said. “But there is a worry that if the news is ‘too good,’ the Fed might be reticent to cut rates as fast as the market has come to expect.”
In the run-up to the figures, economic data was mixed. US services expanded at a modest pace, companies added the fewest jobs since the start of 2021, while unemployment claims trailed estimates.
“After today’s mixed numbers, it’s up to tomorrow’s jobs report to give investors a clearer read on the state of the labor market,” said Chris Larkin at E*Trade from Morgan Stanley. “Markets are still trying to figure out if the economy is slowing too much, and whether the Fed is behind the curve.”
The S&P 500 fell 0.3%. The Nasdaq 100 was little changed. The Dow Jones Industrial Average dropped 0.5%. A gauge of the “Magnificent Seven” megacaps rose 1.6%. The Russell 2000 declined 0.6%. US 10-year yields slid three basis points to 3.73%. The dollar slipped.
In corporate news, Nvidia Corp. climbed, with Bank of America Corp. analysts saying the recent plunge created a buying opportunity. Tesla Inc. jumped on plans to launch the driver assistant in China and Europe. In late hours,…
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