US stocks opened in mixed fashion on Friday after Labor Department data showed that the American economy added fewer jobs than anticipated in August, fueling expectations that the Federal Reserve may roll out a deeper interest rate cut at its upcoming policy gathering.
By 10:52 ET (14:52 GMT), the 30-stock Dow Jones Industrial Average had dropped 282 points or 0.7%, the benchmark S&P 500 had dipped by 74 points or 1.35%, and the tech-heavy Nasdaq Composite had fallen by 350 points or 2%.
Nonfarm payrolls come in below estimates
The US economy added fewer jobs than anticipated in August, but rose from a sharply revised July figure, according to Labor Department data that could factor into the Federal Reserve’s next policy decisions.
Nonfarm payrolls came in at 142,000 last month, up from a heavily downwardly-revised mark of 89,000 in July. Economists had called for a reading of 164,000, up from the initial July mark of 114,000.
Friday’s release also showed the US unemployment rate at 4.2%, compared to July’s figure of 4.3%. The level was in line with estimates.
On a monthly basis, average hourly earnings growth also ticked up to 0.4% after contracting by 0.1% in July.
Following the release, bets that the Fed will introduce a deeper 50 basis-point rate cut — rather than a shallower 25 basis-point reduction — increased.
Meanwhile, the rate-sensitive 2-year Treasury yield sold off and its 10-year counterpart retraced earlier losses. That contributed to a steepening of the yield curve, which is once again positive. Yields typically move inversely to prices.
Broadcom sales outlook underwhelms
Shares in Broadcom (NASDAQ:AVGO) slumped by more than 9% in early US trading after the group’s current-quarter sales guidance slightly disappointed investors’ expectations. By 10:52 ET (14:52 GMT), shares had dropped 10%.
The firm projected that it would deliver $14 billion in revenue in its fourth quarter, just under estimates of $14.04 billion, according to LSEG data cited by Reuters. The forecast was seen as a sign of possible sluggishness in the company’s non-AI-related operations.
The AI segments, however, remained strong, Broadcom said. The firm once again raised its outlook for full-year sales of AI parts and custom chips to $12 billion, up from its prior forecast of more than $11 billion during the period.
Other chip stocks, including artificial intelligence-darling Nvidia (NASDAQ:NVDA) and peer Advanced Micro Devices (NASDAQ:AMD), declined following Broadcom’s report. Marvell Technology (NASDAQ:MRVL) and Micron Technology (NASDAQ:MU) were also lower ahead of the opening bell.
Crude steadies following job market data
Oil prices were higher as investors poured through the nonfarm payrolls report and considered both a large withdrawal from US crude inventories and a planned output delay from OPEC+ producers.
10:52 ET (14:52 GMT), the Brent contract added 1.3% to $77.78 per barrel, while U.S. crude futures (WTI) also traded lower by 1.3% at $68.23 a barrel. Both contracts were on pace to post declines for the week.
The prospect of lower interest rates — which was boosted by the jobs data — is typically supportive of crude prices, as a dip in borrowing costs can theoretically help boost economic activity and broader oil demand.
Elsewhere, crude stockpiles dipped by 6.9 million barrels to 418.3 million barrels during the week ended on Aug. 30, according to the US Energy Information Administration on Thursday. Analysts had forecast a draw of 1 million barrels, Reuters reported.
The OPEC+ group of producers, meanwhile, said it had agreed to postpone a planned increase in oil production for October and November.
Despite support from these developments, Brent settled an over one-year low on Thursday due in part to persistent fears over demand in the US and China.
Scott Kanowsky and Reuters contributed to this report.