Wall Street Nosedives on Uncertain Fed Rate Cut

Wall Street's indexes plummeted as a crucial jobs report failed to clarify the Federal Reserve's interest rate cut plans. The tech sector led losses, with major stocks like Alphabet and Nvidia sinking. September's historical weakness for U.S. equities exacerbated the decline.

Wall Street's main indexes hit a three-week low on Friday following an ambiguous jobs report, leaving uncertainty over the Federal Reserve's anticipated interest rate cut.

A Labor Department report showed that U.S. employment grew less than projected in August, while the unemployment rate dropped to 4.2%, indicating a moderate labor market slowdown. Traders are now betting 73% on a 25-basis point rate cut in September, as opposed to a 50-basis point reduction.

Rate-sensitive growth stocks such as Alphabet and Tesla declined by 2.8% and 5.4%, respectively, with Nvidia falling 4.4%. "The Fed's next move remains unclear," said Melissa Brown, managing director of investment decision research at SimCorp. Meanwhile, some policymakers are prepared to ease borrowing costs at their upcoming meeting, contingent on labor market conditions.

As of 11:44 a.m. ET, the Dow Jones Industrial Average lost 329.57 points, the S&P 500 fell 81.01 points, and the Nasdaq Composite declined 393.51 points. The S&P 500 is on track for its worst weekly performance in 18 months, led by a significant decline in tech stocks.

Broadcom dropped 9.2% after underwhelming revenue forecasts, with other chip stocks like Marvell Technology and Advanced Micro Devices also falling sharply. The semiconductor index is facing its steepest weekly decline since March 2020. Overall, declining issues outnumbered advancing ones, impacting both the NYSE and Nasdaq.

(With inputs from agencies.)