Wall Street dips slightly amid weak labour data and dovish Fed stance

US stocks dip: US stocks ended with slight losses on Wednesday in a day marked by volatility, following disappointing labour market data and comments from a Federal Reserve official suggesting a potential interest rate cut.

Data from the Labour Department revealed that US job openings dropped to a 3.5-year low in July, signalling a continued easing in labour market tightness. This development could strengthen the Fed's case for lowering interest rates at its upcoming meeting later this month.

Mixed sector performance

The benchmark S&P 500 and Nasdaq closed lower, while the Dow Jones ended marginally higher. Utilities and consumer staples stocks were amongst the gainers, whereas energy and technology stocks weighed on the indices. Six out of the 11 sectors in the S&P 500 finished the day in the red.

Bill Strazzullo, Chief Markets Strategist at Bell Curve Trading in Boston, commented, "September is always a turbulent month, but the economy remains resilient. The consumer and labour market are holding strong. I'm still optimistic overall."

Shares of Nvidia, which saw a significant $279 billion drop in market value on Tuesday, closed 1.7 per cent lower. The company later denied reports of receiving a subpoena from the US Department of Justice.

Other major growth stocks also saw declines, with Apple down 0.9 per cent, Microsoft slipping 0.1 per cent, Alphabet falling 0.5 per cent, and Amazon dropping 1.7 per cent. However, Tesla saw a rise of 4.2 per cent.

Raphael Bostic, President of the Atlanta Fed, stated that the central bank should avoid keeping interest rates too high for too long, as it could negatively impact employment. He warned that waiting for inflation to hit the Fed's 2 per cent target before cutting rates could lead to unnecessary labour market disruptions.

Earlier, Wall Street indexes had experienced their largest single-day loss since early August, driven by a sell-off in technology stocks. Historically, September is one of the weakest months for equities.

Eric Beyrich, Co-Chief Investment Officer at Sound Income Strategies, highlighted, "Utility stocks are up today due to weak job data, which supports the case for a Fed rate cut of at least 25 basis points in their upcoming meeting."

Index movements overview

The Dow Jones Industrial Average rose by 38.04 points, or 0.09 per cent, to 40,974.97. The S&P 500 fell by 8.86 points, or 0.16 per cent, to 5,520.07, and the Nasdaq Composite dropped 52.00 points, or 0.30 per cent, to 17,084.30.

The Philadelphia Semiconductor Index rebounded by 0.25 per cent after experiencing its largest one-day drop since the COVID-19 pandemic.

Advanced Micro Devices saw a nearly 3 per cent increase following the appointment of former Nvidia executive Keith Strier as Senior Vice President of Global AI Markets. Conversely, Zscaler fell nearly 19 per cent after projecting fiscal 2025 revenue and profit below estimates. Dollar Tree plummeted 22 per cent after revising its annual sales and profit forecasts downward.

Trading volume across US exchanges was around 10.5 billion shares, below the 20-day moving average of nearly 11 billion shares.

(With Reuters Inputs)