Wall Street heads into September, traditionally the toughest month for stocks, toting COVID-19 uncertainty and questions linked to the Fed’s tapering timetable.
The Nasdaq ended at a record high in mixed trading Tuesday as investors braced for what is typically the worst month of the year for stocks amid looming uncertainty over the pace of the global recovery and the path of the Federal Reserve’s stimulus withdraw.
The Dow Jones Industrial Average finished down 269 points, or 0.76%, to 35,100, while the broader S&P 500 slipped 0.34%.
The Nasdaq, which also hit a fresh intra-day record high, advanced 0.07%
The benchmark 10-year note yield rose to 1.37%.
Last week’s softer-than-expected employment report, which showed 235,000 new jobs were created last month, suggested a more muted pace of recovery over the final months of the year as the impact of government stimulus fades and Delta variant coronavirus infections continue to surge.
The modest gains, as well as forecasts of slower job gains in the coming months as employers hold back investments amid COVID-19 uncertainty, could delay the Fed’s plans to begin tapering the pace of its $120 billion in monthly bond purchases, a move that could also establish a new timeline for rate hikes that extends well into the middle of 2023.
Goldman Sachs, in fact, trimmed its 2021 GDP growth forecast by 30 basis points, to 5.7%, in the wake of both the August jobs report and a series of data releases that could suggest slower growth in the months ahead.
“The weak jobs report shocker left the market feeling a bit uncertain, despite setting new records on two of the first three days of the month,” said Chris Larkin, managing director of trading at E*trade Financial.
Given Friday’s flat initial response, Larkin said “it remains to be seen whether the market will interpret the latest jobs data negatively, as in, the economy is on shakier ground than previously thought, or positively — the economy is on shakier ground than previously thought, but that could delay tapering.”