Mixed Jobs Report Impact 

U.S. Stocks on Wall Street experienced a downward trend as traders speculated that the recent rally, which saw multiple records this year, might have gone too far. This decline coincided with the release of a mixed jobs report, further impacting trading sentiments.   

Key Figures from Jobs Report 

According to the Bureau of Labor Statistics’ report, nonfarm payrolls increased by 275,000 last month, but this was coupled with a downward revision of 167,000 jobs to the previous two months. Meanwhile, the unemployment rate rose to 3.9%, hitting a two-year high. 

Tech Sector Weakness & Market Momentum 

Weakness in the technology sector, particularly notable companies like Nvidia and Tesla, contributed to the market’s overall decline. Concerns arose about an overbought market, especially considering the significant surge in the S&P 500 in recent times, prompting analysts to warn about abnormal gains in equities. 

For the week, the Nasdaq slipped 1.2%, while the Dow Jones and S&P 500 fell 0.9% and 0.3%, respectively.  

Closing levels on Friday, March 8th, 2024:   

Index	Last	Change	%Change
DOW JONES	38,722.69	-68.66	-0.18%
S&P 500	5123.69	-33.67	-0.65%
NASDAQ	16085.11	-188.27	-1.16%
U.S. 10Y	4.07%
VIX	14.74	+0.30	2.08%

Market Conditions and Investor Response 

The selloff in tech and the general market coincided with Bitcoin failing to hold 70,000 suggesting that the market may be overbought and taking some profit was the wise thing to do. 

Matt Maley, chief market strategist at Miller Tabak + Co., advised investors to adopt a more defensive approach and raise cash in response to the market conditions. 

The market is now pricing in a rate cut in June. Like before, it does not really matter when the Fed will move, it’s more important to the market that the next move will be a cut. 

With the CPI report due, it could provide more volatility for the markets as traders try to adjust their positions according to the results. 

Evaluating Downside Risks and Bullish Sentiment 

You would not be blamed if you think the market has some more downside in the near term, but past trends have shown that bullish sentiment tends to prevail. Therefore, it wouldn’t be surprising to see dip buyers step in again. 

Source: CBOE, Bloomberg 

This commentary is written by James Gomes, a seasoned finance industry veteran with extensive experience of over 30 years, including a substantial tenure at a reputable U.S. bank exceeding 20 years.