Wall Street plunges after shock jobs data

Wall Street markets plunged on Friday following a shocking report relating to job data throughout the United States.

On Friday, the Associated Press (AP) reported that the S&P 500 saw a 1.6 percent drop in early trading, while the Dow Jones Industrial Average saw a decline of 1.2 percent of 481 points by 9:35 a.m. EST. The Nasdaq composite saw a drop of 2.6 percent, the AP said.

A new report on job data showed that hiring throughout the U.S. declined in July “much more than economists expected,” prompting concern and fear among different markets, according to the AP.

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The report from the Labor Department released on Friday showed U.S. employers added 114,000 jobs, a sharp drop from the 179,000 jobs posted in June.

Meanwhile, the unemployment rate rose to 4.3 percent, up from 4.1 percent in June, for the highest level since October 2021. The number of jobless Americans also increased by 352,000.

The Labor Department reports comes after data released from the U.S. Bureau of Labor Statistics (BLS) on Thursday showed unemployment claims for the week ending on July 27 reached 249,000, which represented the highest number for this metric in the past year.

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The data on Thursday also showed that the number of Americans collecting unemployment benefits for the week ending on July 20 reached 1.88 million, a rise of 33,000 from the previous week. The four-week average of those collecting unemployment benefits reached 1,857,000, which is the highest level since December 2021, the AP said.

Newsweek reached out to the U.S. Department of Labor via email for comment.

The AP noted that Friday’s Labor Department report comes “in the face of high interest” and added forecasters had predicted employers would add 175,000 job in July.

“It’s jump to 4.3 percent in July crossed a tripwire that historically has signaled that the United States is in recession—though economists say the gauge probably is not reliable in the topsy-turvy post-pandemic economy,” the AP wrote.

Annex Wealth Management chief economist Brian Jacobsen told the AP that the Federal Reserve “is seizing defeat from the jaws of victory.”

“Economic momentum has slowed so much that a rate cut in September will be too little and too late,” Jacobsen told the AP.

Similarly, Matthew Martin, an economist at Oxford Economics, spoke to the AP about the data showing the number of jobs added last month, saying that the “labor demand is slowing.”

However, Martin noted that “companies are not laying off workers in large numbers, which reduces the odds of a negative feedback loop of rising unemployment leading to income loss, reduction in spending, and more layoffs.”

The current state of the U.S. economy is likely to remain a major talking point ahead of the 2024 presidential election.

Update, 8/2/24, 11:55 a.m. EST: This story has been updated with further information.