The market registered a sizable decline on a holiday-shortened week. The S&P 500 fell 4.3%, the Nasdaq lost 5.8% and the Russell 2000 was down 5.7%. Broad selling activity led the S&P 500 to fall below its 50-day moving average.
The downside move was sparked by fears about a weakening labor market and economic growth prospects. Friday’s release of the August Jobs report added to the market’s emerging fears. Hiring activity was lighter than expected in August and there were downward revisions to July and June that left employment 86,000 lower for those months than previously reported. The report also showed that the unemployment rate declined slightly, and average hourly earnings increased a stronger than expected 0.4% month-over-month.
The only sectors to close higher this week were the rate-sensitive real estate sector (+0.2%) and the consumer staples sector (+0.6%). The technology sector closed 7.1% lower on the week. It was the worst performing sector followed by energy (-5.6%), communication services (-5.1%), and materials (-4.8%). Weakness in the semiconductors was a major contributor to losses in the technology sector. The PHLX Semiconductor Index (SOX) dropped 12.2% last week. Broadcom (AVGO) was among the notable names in the space, sliding 15.9% after relatively disappointing guidance that piled onto current fears that the pace of growth is slowing for many the AI related stocks. The yield on the 10-yr US Treasury settled 20 basis points lower at 3.71%. The 2-yr note yield settled 28 basis points lower at 3.65%.