Dow plunges, Nasdaq falters amid weak new labor market data

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U.S. stocks erased early-session gains on Thursday as investors digested weaker-than-expected labor market data that could help set expectations for both interest rate cut hopes and the health of the U.S. economy.

The S&P 500 (^GSPC) fell as much as 0.6%, while the Dow Jones Industrial Average (^DJI) dropped more than 300 points, or about 0.9%. The tech-heavy Nasdaq Composite (^IXIC) erased early gains and fell 0.1%. The gauges ended Wednesday's volatile session mixed as their slow start to September continued.

Private employers in the United States posted their slowest monthly hiring growth since January 2021, new ADP data showed Thursday. Private payrolls grew by about 99,000, well below expectations. Meanwhile, slightly fewer Americans filed a new claim for unemployment benefits last week. On Wednesday, government data showed job openings plummeted.

Taken together, the labor market data serve as a preview for Friday's main August jobs report, crucial to the Fed's policymaking and closely watched amid hopes for a “Goldilocks” economy.

The market is torn between conflicting impulses as data releases paint a discouraging picture for the economy. The recent weak readings justify deeper rate cuts, but could also be a sign that the US is on the verge of a recession and that a “soft landing” is no longer in the cards.

Traders see a nearly 50-50 chance that the Federal Reserve will cut rates by 0.5% at its September meeting.

Read more: Fed Predictions for 2024: What Experts Say About the Possibility of a Rate Cut

On the corporate front, earnings from HPE (HPE) and C3.ai (AI) shed some light on AI growth prospects. C3.ai shares fell 11% after the enterprise AI software maker posted weak subscription revenue. HPE stock fell amid disappointment over its profitability.

Meanwhile, Tesla (TSLA) pared earlier gains and rose 3%. The company plans to continue with plans to launch its fully self-driving software in China and Europe pending regulatory approval.

Live4 updates

  • The Dow Jones falls more than 350 points and the Nasdaq erases the gains of the initial session

    The Dow (^DJI) fell more than 350 points on Thursday, dragging broader markets lower.

    The S&P 500 (^GSPC) fell 0.4%6, while the tech-heavy Nasdaq Composite (^IXIC) erased early-session gains and fell 0.2%.

    The major averages have been swinging throughout the session as investors digest weaker-than-expected private payrolls data ahead of Friday's monthly jobs report.

    Industrials, healthcare and financial sectors led declines on Thursday, while consumer discretionary sectors held on to modest gains.

  • Oil rises 2% as OPEC+ delays plans to increase output next month

    Oil futures rose more than 2% on Thursday following the OPEC+ alliance delayed the reversal some of its voluntary production cuts, meaning it will not release any more barrels onto the market.

    On Thursday, West Texas Intermediate (CL=F) was trading at around $70 a barrel, while Brent (BZ=F), the international benchmark, rose to $74 a barrel.

    The decision, Bloomberg reported, comes after oil prices lost all of their year-to-date gains amid concerns about a slowing Chinese economy and market anticipation of increased supply. The oil alliance's two-month delay means OPEC+ members will not increase output by an additional 180,000 barrels per day in their first year.

  • Nasdaq and S&P 500 rise as Tesla shares advance

    The S&P 500 (^GSPC) gained 0.3%, while the tech-heavy Nasdaq Composite (^IXIC) rose 1%, with consumer discretionary stocks leading the gains.

    Electric vehicle maker Tesla (TSLA) rose more than 6% following news that it plans to pursue the rollout of full self-driving capabilities in Europe and China next year. Meanwhile, e-commerce giant Amazon (AMZN) gained 2%. Shares of artificial intelligence chip giant Nvidia (NVDA) also rose more than 2%.

  • S&P 500 and Nasdaq falter amid more weak labor market data

    U.S. stocks opened little changed on Thursday after weaker labor data was released ahead of Friday's big jobs report, which could influence the Federal Reserve on the size of its expected interest rate cut at its September meeting.

    The S&P 500 (^GSPC) was flat, while the Dow Jones Industrial Average (^DJI) fell slightly. The tech-heavy Nasdaq Composite (^IXIC) erased earlier losses and rose 0.6%.

    New ADP data released before the market opened showed that private employers in the US recorded their lowest monthly hiring growth since January 2021. Private payrolls grew by about 99,000, well below expectations.

    Along with the monthly employment report, the jobs data could influence the Federal Reserve on the size of the interest rate cut it is likely to announce after its two-day meeting this month.

    On the corporate front, C3.ai (AI) shares fell nearly 20% after the enterprise software maker reported weaker-than-expected subscription revenue. Shares of the once wildly successful company are in negative territory for the year.

    Meanwhile, HPE (HPE) shares fell on disappointment over the profitability of its artificial intelligence servers.

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