US Equity Indexes Drop Following Weak Jobs Report

04:39 PM EDT, 09/05/2025 (MT Newswires) -- US equity indexes closed lower on Friday after a disappointing August non-farm payrolls almost guaranteed a cut in interest rates this month, restarting the Federal Reserve's easing program.

The Nasdaq Composite fell less than 0.1% to 21,700.39, the S&P 500 dropped 0.3% to 6,481.50, and the Dow Jones Industrial Average was 0.5% lower at 45,400.86. All three indices ended off intraday lows.

Leading the declines were economically sensitive energy and financials. Real estate, a sector sensitive to interest rates, posted the biggest gains.

Non-farm payrolls rose by 22,000 last month, the Bureau of Labor Statistics reported Friday, falling short of a 75,000 increase expected in a survey compiled by Bloomberg. Gains for July were revised up by 6,000 to 79,000, while June payrolls were adjusted downwards by 27,000 to show a 13,000 decrease, the BLS said.

The unemployment rate rose to 4.3%, as expected, up from 4.2% in July.

"The job market is definitely weakening below most estimates of lowered breakeven rates in light of tighter immigration policy," Derek Holt, the head of capital markets economics at Scotiabank, said in a note. "When paired with [Federal Reserve] Chair [Jerome] Powell's pivot at Jackson Hole, the result cements a rate cut on the 17th. The residual questions are how big and/or how frequent."

The odds of a 25-basis-point cut in interest rates in September stood at 90% by late Friday afternoon, down from 99.6% earlier in the day, paving the way for a steeper, 50-basis-point cut, according to the CME FedWatch Tool. The probability of the bigger cut stood at 10% late Friday, versus zero a day ago.

Most Treasury yields dropped, with the 10-year yield down 8.8 basis points to 4.09%, and the two-year rate 7.9 basis points lower at 3.52%.

Gold futures rose 1.2% to $3,648.61, after scaling a new peak of $ 3,655.50 earlier in the session.

The ICE US Dollar Index slid 0.6% to 97.75.

West Texas Intermediate crude oil futures slumped 2.3% to $62.03 a barrel.

Meanwhile, in company news, Broadcom (AVGO) expects fiscal 2026 artificial intelligence revenue to improve "significantly" after securing more than $10 billion of orders for AI racks. The chipmaker's shares surged 9.4%, the top gainer on the S&P 500 and the Nasdaq.

Broadcom (AVGO) will begin mass production next year of a custom AI chip co-designed with OpenAI, which is expected to reduce its reliance on Nvidia (NVDA) , the Financial Times reported, citing unnamed sources familiar with the matter. Shares of Nvidia (NVDA) dropped 2.7%, the second-worst performer in the Dow Jones index.

Lululemon Athletica (LULU) shares plunged 19%, the steepest decline on the S&P 500 and the Nasdaq, after the company lowered its full-year outlook following a drop in fiscal Q2 net income.

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