[New York Market Briefing] Employment cooling, concerns over economic slowdown… three major indexes close lower

U.S. 'employment shock' strengthens expectations of a rate cut

Investors shift focus to fears of an economic recession

The three major indices on the New York market closed lower. This was due to the U.S. labor market weakening unexpectedly, increasing concerns about an economic slowdown.

On the 5th (local time) in New York, the Dow Jones 30 Industrial Average fell 220.43 points (-0.48%) from the previous trading day to 45,400.86. The Standard & Poor's (S&P) 500 index dropped 20.58 points (-0.32%) to 6481.5, and the Nasdaq Composite Index fell 7.31 points (-0.03%) to 21,700.39.

The U.S. Department of Labor said nonfarm payrolls in the U.S. increased by 22,000 in August from the previous month. This figure was far below the experts' forecast of 75,000 compiled by Dow Jones. As U.S. employment conditions unexpectedly deteriorated in August, expectations grew that the U.S. central bank (Fed) will move to cut rates in September and that the ultimate size of the rate cut will be larger.

With strengthening expectations of a rate cut, the three major New York indexes even briefly reached record highs early in trading. However, investors later focused more on recession fears stemming from worsening employment than on expectations of a rate cut, which dampened investment sentiment.

Semiconductor company Broadcom surged 9.4% on the day after reporting results that exceeded expectations. News that Broadcom plans to release chips next year to train and run AI models in collaboration with OpenAI also boosted the company's stock.

In contrast, Nvidia, which dominates the cutting-edge AI chip market, fell 2.7% on that news. Tylenol maker Kenvue plunged 9.35% on the day after the Wall Street Journal (WSJ) reported that the U.S. Department of Health and Human Services, led by Secretary Robert Kennedy, could release a report mentioning a potential link between taking Tylenol during pregnancy and autism.

Song-ryeol Lee, Hankyung.com reporter yisr0203@hankyung.com