Wall St slides to over 3-week low after mixed payrolls data

Wall Street's main indexes fell to their lowest in over three weeks on Friday after a crucial jobs report did little to clear the uncertainty around the magnitude of the Federal Reserve's interest rate cut expected at its meeting later this month.

A Labor Department report showed US employment increased less than expected in August, but a drop in the jobless rate to 4.2 per cent suggested an orderly labor market slowdown continued.

Traders' bets for a 25-basis point rate cut in September stood at 73 per cent, according to the CME Group's FedWatch Tool, while those for a 50-bps reduction in rates were at 27 per cent, down from a brief rise to 51 per cent after the data.

Rate-sensitive growth stocks such as Alphabet and Tesla fell 2.8 per cent and 5.4 per cent, respectively, while Nvidia lost 4.4 per cent, nearing the level of $100 last seen in early August.

"There's uncertainty about what the Fed is going to do," said Melissa Brown, managing director of investment decision research at SimCorp.

"We certainly would like to see rates come down, but on the other hand could an aggressive move suggest that they see something that makes them think the economy is worse off than we thought?"

Meanwhile, some policymakers said they are ready to lower interest rates at the Fed's meeting in two weeks, with one of them saying he could support a bigger cut in borrowing costs, should the cooling labor market need support.

The labor market has come under scrutiny after an unexpected rise in the jobless rate sparked recession fears nearly a month ago and had sent the tech-heavy Nasdaq down more than 10 per cent into correction territory and led to a selloff in global markets.

At 11:44 a.m. ET, the Dow Jones Industrial Average fell 329.57 points, or 0.81 per cent, to 40,426.18, the S&P 500 lost 81.01 points, or 1.47 per cent, to 5,422.40 and the Nasdaq Composite lost 393.51 points, or 2.30 per cent, to 16,734.15.

All major sectors on the S&P 500 were trending lower, led by a 2.6 per cent drop in tech stocks.

Wall Street's three main indexes were on track for a weekly loss. The benchmark S&P 500 was on course for a weekly drop of more than 3 per cent, its steepest decline in 18 months, led by a more than 6 per cent slide in technology stocks.

September has been historically weak for US equities, with the S&P 500 down about 1.2 per cent for the month on average since 1928.

Broadcom shed 9.2 per cent after the chipmaker forecast fourth-quarter revenue slightly below estimates, hurt by sluggish spending in its broadband segment.

Other chip stocks such as Marvell Technology dropped 5.1 per cent and Advanced Micro Devices shed 4.5 per cent, sending the Philadelphia SE Semiconductor index down 4.2 per cent.

The semiconductor index is set for its biggest weekly drop since March 2020.

Among others, Super Micro Computer dropped 6.4 per cent after brokerage J.P. Morgan downgraded the AI server maker's shares to "neutral" from "overweight".

Declining issues outnumbered advancers by a 2.79-to-1 ratio on the NYSE and by a 3.37-to-1 ratio on the Nasdaq.

The S&P 500 posted 16 new 52-week highs and 12 new lows, while the Nasdaq Composite recorded 19 new highs and 134 new lows.