US Stocks Stumble as Weak Jobs Report Fuels Recession Fears

Wall Street’s optimism evaporated Friday as a surprisingly weak August jobs report triggered a sharp market reversal, sending major U.S. indices tumbling from intraday highs amid rising fears of an economic slowdown.

The U.S. economy added just 22,000 jobs last month, a figure that fell dramatically short of the 75,000 expected by economists. The report also included a troubling revision for June, which now shows a loss of 13,000 jobs, the first contraction since 2020. The unemployment rate also ticked up to 4.3%, its highest level since October 2021. The disappointing data immediately overshadowed investor hopes for easier monetary policy, sparking a sell-off that erased early gains.

The Dow Jones Industrial Average fell 249 points, or 0.55%, while the S&P 500 lost 0.48%. The tech-heavy Nasdaq Composite declined a more modest 0.28%. The sudden shift in sentiment illustrated a core conflict for investors: while a softening labor market makes Federal Reserve rate cuts more likely, the data was weak enough to signal a potential recession. This left Wall Street grappling with whether the job market is .

The bond market reacted decisively, with investors piling into the safety of government debt. The 2-year Treasury yield plunged 12 basis points to a three-year low, reflecting . Traders are now fully pricing in a rate cut at the Fed’s September meeting, with a growing number anticipating at least three cuts by the end of the year, according to CME Group data. The Cboe Volatility Index (VIX), often called the market's "fear gauge," spiked 7.5% as uncertainty mounted.

The market’s negative reaction highlights the fragile balance between hopes for Fed support and fears of underlying economic decay. As one strategist noted, the report was the "exclamation point" on a week of data pointing to a slowing labor market, leaving investors to question whether the foundation of the economy is beginning to crack.