The stock market was all over the place this week, with a large drop on Monday due to a weak jobs report.
A surprising jobs report released last week paired with a volatile Japanese market led to a massive selloff during Monday’s trading day, with both the Dow Jones and the S&P seeing their worst sessions since 2022. In the Bureau of Labor Statistics' most recent employment report, only 114,000 jobs were added, down substantially from the previous month when 206,000 jobs were added. This sudden slowdown in employment has led to mounting concerns about an economic recession.
Despite a rough week for the stock market, the jobs report has effectively assured the rate cuts expected in September will happen, Melissa Cohn, William Raveis Mortgage regional vice president, said in a statement. Consumers have been waiting for these rate cuts to start borrowing again, but they should only expect a small initial cut. Should the Fed cut rates multiple times through the end of the year, then consumers may see more substantial movement in interest rates.
This week’s ebb and flow of the market created a complicated look at where the economy may be heading. Economists have differing opinions on whether this means the U.S. is catapulting toward a recession. The unemployment rate rising to 4.3% triggered an economic rule known as the Sahm rule, which is an indicator of a recession. The rule states that a sudden increase by 0.5 percentage points in the unemployment rate within a 12-month period typically indicates a recession is coming.
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