August jobs report, chip stocks under pressure: Morning Brief
On today's episode of Morning Brief, Hosts Brad Smith and Madison Mills break down the market's reaction to August's critical jobs report and the rocky road for the chip sector. The August jobs report saw 142,000 nonfarm payroll jobs added to the labor market, coming in below economist expectations of 165,000. Meanwhile, the unemployment rate came in line with estimates, falling to 4.2% from 4.3% in July. Acting US Labor Secretary Julie Su joins Yahoo Finance senior reporter Jennifer Schonberger, who finds cooling labor growth to be "part of the transition from the breakneck speed of job growth that we saw in the initial years of the recovery." She adds, "It's a... labor market that remains very strong... by all indications, especially when you combine it with our strong GDP growth, the battle against inflation, the labor force participation. Again, women in the labor force broke the last record which we set, which was in May," Su says. "Overall, the indicators of the economy are of strong, robust growth and not recession." NatWest Head of US Michelle Girard believes that the jobs print "won't push anybody off their prior position." She notes this report supports those looking for a 25 basis-point cut because it signals continued resilience, while also supporting the 50 basis-point cut due to "downward revisions." She questions, "Did it really come down to this one report, to be honest, for the Fed?" She emphasizes the Fed's intense focus on inflation, with the main concern being that they hit the 2% inflation target. However, she notes there has been "enough evidence" to show that inflation is trending downward, so the focus now shifts to the economy. NYSE Senior Market Strategist Michael Reinking reiterates the notion that August's jobs print did not solidify either a 25- or 50-basis-point cut, calling it "a coin flip." He points out improvements in the headline payrolls number, but suggests that downward revisions from July offset the positive outlook. Regarding the unemployment rate, he comments that "the bar was very low." "Unfortunately, I don't think it gives you a definitive answer from a Federal Reserve perspective. There's a lot of would've, could've, should've," Reinking adds. Shares of Broadcom (AVGO) are under pressure after its lackluster sales forecast for the fourth quarter overshadowed its earnings beat. The Futurum Group CEO Daniel Newman digs into the chip company's earnings and its overall outlook amid a heated AI race. "Clearly, the Street wasn't happy. They were looking for some sort of outsized number... But this is a little more of a story about the diversification of the business as well. So the AI business is performing. You're going to have some complicated networking that Broadcom is going to help solve. And of course, these accelerators, these AI processors, Broadcom is in the driver's seat. They have won some really important designs," Newman tells Yahoo Finance. This post was written by Melanie Riehl
