Stocks Decline Amid Economic Worries Following Poor US Unemployment Data

September 6, 2025

Market Overview

The S&P 500 index saw a decrease of 0.32% on Friday, while the Dow Jones Industrial Average fell by 0.48%. Interestingly, the Nasdaq 100 index managed a slight uptick of 0.08%. The September e-mini S&P Futures declined by 0.35%, but the September E-Mini Nasdaq futures saw a modest increase of 0.04%.

Initially, stocks rebounded following a disappointing US unemployment report that bolstered expectations for at least two rate cuts from the Federal Reserve by year-end. However, later in the day, sentiments shifted, leading to concerns that corporate profits might diminish as the economy appears to be heading into a recession.

The August employment report revealed an increase of just 22,000 jobs, falling short of the anticipated 75,000. Over the last three months, the average monthly job growth has been around 29,000. There was a slight upward revision for July’s figures, adjusted from 73,000 to 79,000, but June’s numbers reflected a decline of 13,000. Private employment in August rose by only 38,000, and manufacturing jobs experienced a drop of 12,000. The unemployment rate ticked up by 0.1 points, moving from 4.2% in July to a three-and-a-half-year high of 4.3%, which aligns with market predictions.

Hourly earnings rose by 0.3% month-over-month in August, meeting market expectations. On the positive side, the year-over-year increase in average hourly earnings eased slightly to 3.7% from July’s 3.9%, falling short of the expected 3.8%.

The unemployment report provided some underlying support for the stock market, as the yield on the 10-year Treasury note dropped by 7 basis points. The market is currently pricing in a 9% likelihood of a 50 basis point rate cut during the Federal Open Market Committee meeting on September 16-17, a noticeable change from previous expectations of no chance at all. Following a widely anticipated 25 basis point cut at the same meeting, the market estimates an 84% chance of another similar reduction at the October 28-29 meeting, up from the earlier 54%. Overall, the market is pricing in a total reduction of 73 basis points in federal funding rates by the year’s end, from the current 4.38%.

Concerning tariffs, a federal appeals court ruled late Friday that President Trump overstepped his authority by imposing global tariffs without Congressional consent. Nevertheless, the court decided to keep the tariffs in place while the case continues, with the Federal Circuit Court stating that, while the President has significant powers in response to a declared national emergency, this does not extend to imposing customs duties. The case may soon head to the Supreme Court for a conclusive ruling. According to Bloomberg Economics, if the tariffs are enacted, they could increase from 13.3% to 15.2%, significantly higher than the 2.3% average from 2024 before their announcement.

Global Market Performance

Foreign stock markets had mixed results on Friday. The Euro Stoxx 50 dropped 0.53%, while China’s Shanghai Composite posted a gain of 1.24%, breaking a three-session losing streak. Japan’s Nikkei 225 rose by 1.03%.

Interest Rates and Bonds

On December 10th, the T-note rose by 15.5 ticks, with the 10-year Treasury yield falling to 4.090%, reaching a five-month low. T-note prices increased due to the weak US unemployment report, driving expectations for easing measures from the Fed. Prices also reacted to a drop in crude oil values, which fell by 2.5% on Friday.

The financial markets on Friday concentrated on the weak unemployment data while momentarily brushing aside concerns regarding the Federal Reserve’s independence.

European government bond yields also declined, with Germany’s 10-year yield falling by 2.662% and the UK’s 10-year bond yield decreasing by 4.646%.

The swap market is currently pricing in a mere 1% chance of the ECB implementing a 25 basis point rate cut at its policy meeting on September 11.

US Stock Movers

On Friday, US stocks showed mixed results, with three rising and four declining. Tesla led the gainers with a 3.6% increase, following news of a potential $1 trillion wage deal that could encourage Elon Musk to increase his efforts at Tesla. Meanwhile, Apple dipped slightly despite reporting record annual sales in India, around $9 billion. Nvidia fell by 2.7% amid news that Broadcom is making inroads into the AI chip market. Microsoft and Amazon also saw declines of 2.6% and 1.4%, respectively.

Broadcom performed well with a 9.4% rise following its agreement with OpenAI to design and produce new AI chips intended to rival Nvidia’s offerings. Chipmakers generally fared well, with Micron gaining 5.8% and ASML, KLA-Tencor, and Align Technology also experiencing gains of over 3%.

Energy stocks struggled, influenced by a 2.5% fall in October WTI crude oil prices, amid Saudi Arabia’s indication that OPEC+ is eager to accelerate oil production increases. Shares of ConocoPhillips, Diamondback Energy, Exxon Mobil, Chevron, and Devon Energy all dropped by over 2%.

In the cryptocurrency sector, Bitcoin saw a rotation of +1%. Coinbase declined by 2.5%, while MicroStrategy gained 2.5%. Riot Platforms and Mara Holdings each rose by over 0.5%.

Homebuilders exerted downward pressure on mortgage rates as they benefited from declining 10-year Treasury yields on Friday. Companies like D.R. Horton, Lennar, and PulteGroup all closed up by 2% or more, while Toll Brothers saw a smaller gain of 1.4%.

Lululemon Athletica faced a significant drop of 18.6% after lowering guidance due to challenges in the consumer market and tariffs.