Stocks Close Mixed as US Unemployment Surges

Introduction

Stocks closed mixed on Friday after the August payrolls report showed a surprise jump in US unemployment as the economy added more jobs than expected.

Stock Market Performance

• The tech-heavy Nasdaq Composite (^IXIC), which initially rose at the open, closed flat to conclude the first trading day of the month.
• The benchmark S&P 500 (^GSPC) eked out a modest gain of about 0.2%.
• The Dow Jones Industrial Average (^DJI) led the day’s session, up more than 0.3%, or 116 points.

August Job Report

The US created 187,000 jobs in August, compared with the 170,000 forecast by economists, while the unemployment rate rose 3.8% versus the 3.5% expected.

Impact on Federal Reserve’s Interest Rates

Investors will now scrutinize the data for what it shows about the health of the labor market, which will add more fuel to the debate about the Federal Reserve’s future path of interest rates.

“We expect this labor market rebalancing to continue,” Powell said in a speech at the Jackson Hole Economic Symposium last week. “Evidence that the tightness in the labor market is no longer easing could also call for a monetary policy response.”

China’s Manufacturing Data

Manufacturing data out of China fanned hopes the world’s second-biggest economy, which has been struggling to recover from COVID-19, could be on the upturn. A private-sector survey showed factory activity rose unexpectedly in August.

Conclusion

Despite the mixed performance of stocks, the unexpected surge in US unemployment and the positive manufacturing data from China have created uncertainty in the market. Investors will closely monitor these developments to gauge the future direction of the economy and its impact on stock prices.

References

• Click here for more information on monthly losses of S&P 500 and Nasdaq
• Read about the US job creation in August
• Learn about the unexpected rise in factory activity in China
• Click here for the latest stock market news and in-depth analysis
• Read the latest financial and business news from Yahoo Finance