U.S. Stocks Tumble Amid Labor Market Woes and Fed Rate Cut Uncertainty

U.S. stocks fell on Friday due to a labor market slowdown and doubts about the Federal Reserve's plans for interest rate cuts. The S&P 500 and Nasdaq saw significant losses, with declines led by communication services, technology and consumer discretionary equities. Traders remain uncertain about the Fed's next move.

U.S. stocks took a tumble on Friday, weighed down by a labor market slowdown that left traders unsure about the Federal Reserve's course of action regarding interest rate cuts. All three major indexes recorded losses, with the 11 sectors of the S&P 500 feeling the pinch, particularly in communication services, technology, and consumer discretionary equities.

The U.S. Labor Department reported that employers added 142,000 jobs in August, missing analyst expectations, and revised July's job growth down to 89,000. This has fueled speculation that Federal Reserve Chair Jerome Powell may need to cut rates this month, but the timing might be too late to achieve a soft economic landing, warned Lou Basenese of MDB Capital.

Market bets for a 25-basis point rate cut in September were at 73%, while a 50-basis point cut had a 27% chance, down from a recent high. Preliminary data showed the S&P 500 fell 1.70%, the Nasdaq dropped 2.55%, and the Dow Jones declined by 0.99%, with leading megacap growth stocks contributing to the dip.

Broadcom led the losses among chipmakers after forecasting lower-than-expected Q4 revenue, pulling other semiconductor stocks down as well. The Philadelphia SE Semiconductor index also ended lower.

(With inputs from agencies.)