European stocks drop 2.5% after weak U.S. jobs report

European stocks experienced a significant decline on Friday, September 6, 2024, following a disappointing U.S. jobs report that dampened global market sentiment. The pan-European Stoxx 600 index fell by 1.15%, with nearly all sectors closing in the red, particularly technology and mining, which dropped 2.39% and 2.41%, respectively. The health care sector was an exception, showing a slight increase of 0.02%. This marked the worst weekly performance for the index since early August, ending the week down 2.5%. The downturn in European markets was influenced by the U.S. August jobs report, which revealed a payroll increase of only 142,000, falling short of the 161,000 expected by analysts. Although the unemployment rate decreased to 4.2%, the overall weak data from the U.S. has raised concerns about economic growth. This has led to speculation that the Federal Reserve may opt for a more aggressive interest rate cut of 50 basis points at its upcoming meeting on September 18, rather than the previously anticipated 25 basis points. In addition to the jobs report, other economic indicators from the U.S. have also been underwhelming, including manufacturing surveys and private sector payrolls. These developments have contributed to a bearish outlook for U.S. stocks, with the S&P 500 and Nasdaq both experiencing significant declines. In Europe, specific companies like Volvo Cars faced challenges, with shares dropping 5.7% after the automaker revised its medium-term targets. Investors are also keeping an eye on regulatory developments, such as the European Union Aviation Safety Agency's order for inspections of Rolls-Royce engines on Airbus A350-1000 aircraft, following a recent incident involving a Cathay Pacific flight.