Wall Street indexes end lower as jobs data fuels economic worries

The U.S. economy created 22,000 jobs last month instead of an estimated 75,000, confirming softening labor market conditions, according to the Labor Department report.

The three major U.S. stock indexes initially rose and broke records following the data, as traders of futures tied to the Fed's policy rate boosted bets that the U.S. central bank will trim rates in quick succession, starting this month, with a 50-basis-point easing now on the table.
The major indexes ended well off their lows of the session.

"It's going to take more than one bad data set for us to dislodge this market at this point," said Pete Mulmat, CEO of IG North America, parent company of tastytrade, in Chicago.

With so much focus on the rate outlook, U.S. stock investors will pay close attention to inflation data in the coming week. The monthly U.S. consumer price index is due on Thursday.

The Dow Jones Industrial Average fell 220.43 points, or 0.48%, to 45,400.86, the S&P 500 lost 20.58 points, or 0.32%, to 6,481.50 and the Nasdaq Composite dropped 7.31 points, or 0.03%, to 21,700.39.

For the week, the Dow fell 0.3%, the S&P 500 gained 0.3% and the Nasdaq rose 1.1%.

"The payroll report today confirms a softening labor market and justifies a rate cut at the Fed meeting later this month," said Bill Merz, head of capital markets research and portfolio construction at U.S. Bank Asset Management in Minneapolis.

"The labor market is going to remain a very important indicator for how this economic picture plays out, but so far consumer spending has really surprised many people despite softening in the labor market."

BofA Global Research also adjusted its outlook following the report, forecasting one quarter-point cut each in September and December.

The U.S. rate futures market has priced in a 7% chance that the Fed will cut by 50 bps when it meets on September 16-17, and a 93% probability of the more standard 25 bp cut, according to LSEG calculations.

The rate-cut expectations helped the real estate sector (.SPLRCR), opens new tab end 1% higher, and the Philadelphia Housing Index jump 2.1%.

Shares of Kenvue fell 9.3% after the Wall Street Journal reported, citing people familiar with the matter without including evidence, that U.S. Health Secretary Robert F. Kennedy Jr. plans to announce that use of Kenvue's pain medication Tylenol in pregnant women is potentially linked to autism.

Among other decliners, Lululemon Athletica dropped 18.6% after the yogawear-maker slashed its annual profit forecast the second time in a row.

Advancing issues outnumbered decliners by a 1.87-to-1 ratio on the NYSE. There were 508 new highs and 64 new lows on the NYSE.

On the Nasdaq, 2,704 stocks rose and 1,899 fell as advancing issues outnumbered decliners by a 1.42-to-1 ratio.

Volume on U.S. exchanges was 16.95 billion shares, compared with the 16.05 billion average for the full session over the last 20 trading days.