September market turmoil as jobs data cools and Fed cuts loom

September has seen significant market volatility, primarily driven by disappointing labor data. In August, the U.S. economy added 142,000 jobs, which, while an improvement from July's 89,000, fell short of the expected 160,000. This figure is also notably lower than the average job growth of 202,000 over the past year. Although the unemployment rate decreased slightly to 4.2% and wage growth surpassed estimates, these factors did not alleviate market concerns. As a result of the underwhelming job figures, traders are increasingly anticipating a larger interest rate cut from the Federal Reserve, with a 50 basis point reduction now seen as more likely than a 25 basis point cut. This shift in expectations has contributed to a turbulent week for Wall Street, marking it as one of the worst of the year. The semiconductor sector faced additional challenges, including a potential antitrust investigation into Nvidia Corp. by the Department of Justice and disappointing guidance from Broadcom. The Philadelphia Semiconductor Index experienced its worst week in over two years, with Nvidia's shares suffering significant losses, extending their biweekly decline to over 20%. In the broader economic landscape, concerns about corporate tax changes proposed by political figures like Kamala Harris and Donald Trump have raised alarms about potential earnings volatility for the S&P 500. These developments underscore the interconnectedness of labor data, interest rate expectations, and sector-specific challenges in shaping market dynamics.