Flat Market Open Expected After Job Report Misses Expectations and Tech Stocks Slide
Flat Market Open Expected After Job Report Misses Expectations and Tech Stocks Slide
By:JJ Kinahan
Market leaders have suffered declines, suggesting a reassessment of portfolios
- Major indices closed mixed yesterday, with modest moves but notable volatility decreasing by 6.5%.
- The August jobs report revealed a slowing labor market, with job creation slightly below expectations.
- Stocks like Nvidia (NVDA) Microsoft (MSFT) and Super Micro Computer (SMCI) have seen significant declines, highlighting the need for diversification.
Stocks are set for a flat open today after remaining relatively quiet yesterday. Major indices closed the day mixed, with the S&P 500 down 0.3% and the Nasdaq Composite gaining 0.25%.
Both the Dow Jones Industrial Average and Russell 2000 dropped 0.5%. Despite these modest moves, volatility decreased by 6.5%. Today’s focus is on the August jobs report.
The forecast predicted 164,000 new jobs and an unemployment rate of 4.2%. However, actual job creation was slightly lower at 142,000, with the unemployment rate matching the expected 4.2%.
Heading into the report, the CME Fed Watch Tool indicated a 59% chance of a quarter-point interest rate cut at the upcoming Federal Reserve Open Market Committee (FOMC) meeting. This probability remained stable after the jobs data.
Weak job growth
Note that June and July jobs numbers were revised downward, reflecting a slowing labor market. June saw a downward adjustment of 61,000 jobs, and July was revised lower by 25,000, for a total of 86,000 fewer jobs over the past two months.
From a technical perspective, the S&P 500 is hovering near its 50-day moving average, while the Nasdaq Composite is at its 100-day moving average—key levels of support or resistance.
Shorter-term traders watch the 21- and 50-day averages, while longer-term investors focus on the 100- and 200-day lines. Breaking below these could signal trouble for stocks.
Time to review portfolios
As the market prepares for a flat to slightly higher open, the S&P 500 is facing its first losing week since early August, and the Nasdaq Composite is on the verge of back-to-back down weeks.
Meanwhile, major market leaders like Nvidia, Microsoft, and Super Micro Computer have suffered significant declines, suggesting investors may want to reassess their portfolios.
JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan
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