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Major stock averages slide for third week, Nasdaq posts six-day losing streak

Pro Picks: Watch all of Friday's big stock calls on CNBC
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Pro Picks: Watch all of Friday's big stock calls on CNBC

U.S. equities fell on Friday to cap their third straight weekly decline, after a solid August jobs report failed to ease fears that the Federal Reserve would keep aggressively hiking interest rates to fight inflation.

After rallying through the morning, the Dow Jones Industrial Average erased a 370-point gain and finished the session lower by 337.98 points, or about 1.1%, at 31,318.44. The S&P 500 fell roughly 1.1% to 3,924.26, its lowest close since July. The Nasdaq Composite declined 1.3% to 11,630.86, recording its first six-day losing streak since 2019.

All of the major averages were lower to end the week, making it their third negative week in a row after slumping in the final days of August. The Dow and S&P lost roughly 3% and 3.3%, respectively, while the Nasdaq fell 4.2%.

"There's still a lot of nervousness around what we'll see over the next few months," said Callie Cox, U.S. investment analyst at eToro. "Yes, inflation and the job market are coming back into balance, but at what cost? Markets are still figuring that out."

"To make matters worse, the S&P 500 is trapped in the danger zone – below its three big moving averages," she added. "Those moving averages served as floors up until a few weeks ago. Now, they seem to be ceilings that the index just can't bust through. The mood has definitely changed. While we may not test the lows of this sell-off again, we also may not reach new highs any time soon."

Stocks had been weighed down throughout this week by hawkish comments from Federal Reserve officials signaling that interest rate hikes aren't going away anytime soon. That's put traders on watch for a retest of the June lows, especially knowing September is historically a poor month for the market. Some have suggested that if the S&P 500 fails to hold the 3,900 level, those summer lows could come back into play.

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Some investors were briefly comforted on Friday by the highly anticipated jobs report, which showed the economy added 315,000 jobs for the month, just under the Dow Jones estimate for 318,000. Stocks rallied in the first part of the day.

The unemployment rate rose to 3.7%, two-tenths of a percentage point higher than expectations. The August report is particularly important because it's one of the last major economic reports the Fed will weigh before it raises rates at its September meeting. This data point could help the central bank determine whether a 75-basis-point hike.

The last major economic report of note is August CPI on Sept. 13 and is more likely to determine how aggressive the Fed needs to be in the near term.

Lea la cobertura del mercado de hoy en español aquí.

Major averages slide to cap their third week of losses in a row

Stocks continued their afternoon slide to end the day lower after staging a dramatic market reversal earlier in the day.

The Dow Jones Industrial Average erased a 370-point gain and finished the session lower by 337.58 points, or 1.1%. The S&P 500 gave back a 1.3% gain to close down 1.1%. The Nasdaq Composite lost 1.3%, after being up as much at session highs, for its first six-day losing streak since February.

— Tanaya Macheel

Investors are anxious but not panicked, says Sanctuary's Kilburg

There's been a lot of selling pressure over the past five sessions before the market moved higher Friday, initially, on what investors are calling a "Goldilocks" August jobs report: not too hot, not too cold, just as expected.

"It's a combination of people getting a little bit nervous – is there further to go? Are we still in this bottom discovery? But nonetheless, I see support here at 3,900 on the S&P 500," Sanctuary Wealth's chief investment officer, Jeff Kilburg, said of the market moves on CNBC's "The Exchange" Friday.

Kilburg also pointed to the thin trading volume heading into a holiday weekend in the U.S. as reason for the days dramatic volatility, and reiterated his view that the bottom is in.

"I see the bottom in the S&P 500 printed in June… Here people are talking for a new bottom, I don't see that, there are too many forces here," he said. "And don't forget this is a midterm election year so as we get more certainly in the month of September, I think this is going to bode well for the bulls."

"The VIX is under 26… that anxiety certainly is there, but there's no panic," he added. "This is just part of the process as we're still trying to figure out: is the Fed really going to pull the trigger on 75 basis points?"

— Tanaya Macheel

September selling may have gotten a head start

Friday's afternoon rollover is probably giving veteran traders deja vu to past Septembers, as this has historically been the worst month for stocks.

However, there are some signs that investors may already have gotten most of their seasonal selling out of the way. Morgan Stanley Investment Management's Andrew Slimmon said that high beta stocks, typically a gauge of risk appetite, have sharply underperformed the S&P 500 during the recent losing streak after outperforming the market at a historically high level during the summer rally.

"When you think about the rally off the June low, that was led by a lot of risk-on. You can have a rally where defensives lead, but it was very much a risk-on rally," Slimmon said.

He pointed to the Invesco S&P 500 High Beta ETF (SPHD), which has dropped nearly 12% since mid-August after dramatically outperforming the market over the prior two months.

"That's been washed out in a big way. ... The only reason to pause on 'it's going to be a bad month' is that has been really bad just recently, especially for high-risk stocks," Slimmon said.

— Jesse Pound

Tech's leading stocks to roll over Friday, but communication, healthcare & financials aren't helping either

It's easier to pick out the parts of the S&P 500 that are holding up Friday, rather than those sinking beneath the waves after lunch.

  • In technology, look at Microsoft, Apple and Nvidia, all off between 1% and 2%
  • Communication services are being led by Google, Meta, Comcast (CNBC parent) and Charter Communications, down between 1.2% and 2.7%
  • Consumer cyclicals are mostly Tesla (-2.3%) and Amazon (-0.3%)
  • Financials are hurt most by Berkshire Hathaway (-1.0%)
  • Healthcare's suffering, too, with Johnson & Johnson, Lilly, Abbott, Danaher and Pfizer all down between 1% and 1.7%
  • Philip Morris, Coca-Cola, PepsiCo and Costco are all hurting consumer defensives, falling 1.1% to 2.0%

What's hanging in there but not enough to hang your hat on? Very little outside energy, which is broadly higher across the board. Searching for green, there's the fertilizers (CF and Mosaic), a gold miner (Newmont) and most money-center (Citi, JPMorgan) and a handful of regional banks (Citizens and PNC).

— Scott Schnipper

Russia will hold off on reopening the Nord Stream pipeline, according to reports

Russia's Gazprom will delay the reopening of the Nord Stream 1 pipeline, according to Reuters

State-controlled Gazprom said that it found a fault while performing maintenance on the pipeline. Nord Stream 1 runs under the Baltic Sea and supplies gas to Germany and other European nations. The pipeline had been due to resume operations on Saturday, following three days of maintenance.

The news comes at a time when Europe is scrambling for fuel to get through the winter.

Natural gas futures for October delivery ticked down more than 4%. West Texas Intermediate futures ticked up by about 0.1%, while Brent crude futures gained 0.6%.

—Darla Mercado

Stocks roll over in afternoon trading

Major averages fell sharply in afternoon trading, wiping out earlier gains as investors took off risk before the long weekend.

The Dow was up 370 points at one point before falling into negative territory. The S&P 500 traded 1.3% higher at its intraday peak, while the Nasdaq was up 1.4% at its high.

There was no apparent reason for the sudden reversal, but some say Friday's solid jobs report didn't help change views on the Federal Reserve's aggressive rate hikes.

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— Yun Li

The U.S. could be in a 'rolling recession,' Schwab's Liz Ann Sonders says

The U.S. economy may not be in a traditional recession but rather a sector-specific one that will inflict is own damage, according to Liz Ann Sonders, Charles Schwab's chief investment strategist.

"What could happen is a rolling recession, where different pockets of the economy get hit at different times," Sonders said Friday. "Some of the goods-side of the economy, areas that were significantly boosted by the pandemic, stay-at-home areas, those segments of the economy are clearly in recession. But it's offset by the services side."

Debating whether the economy is in technical recession, following consecutive quarters of negative GDP, is "academic at this stage in the game," she added in an interview after the Bureau of Labor Statistics reported Friday that the economy added 315,000 jobs in August.

In fact, she said if the U.S. is facing recession, now would be a good time to have it.

"I'd rather it be underway now or happening soon, because that's a pretty effective way to bring inflation down," Sonders said. "The sooner you're in the sooner you're out of one."

The economy stands at least a decent chance of avoiding a third straight negative GDP reading. Economic data for Q3 thus far is pointing to growth of 2.6% for the July-to-September period, according to the Atlanta Fed's GDPNow tracker.

But Fed officials at this point are more concerned about slowing down inflation, which is running around its fastest pace in more than 40 years, and are willing to sacrifice growth and allow unemployment to run higher. Traders assigned a 58% chance the Fed will tack on another 0.75 percentage point rate hike at the September meeting, down from 75% a day ago, according to CME Group data.

"This could be a jobs-full recession," Sonders said. "The only downside to that is the Fed wants to see some weakening in the labor market. To the extent that inflation doesn't come down consistently and you see strength in the labor market, that just puts to bed the notion that there's going to be a pivot anytime soon."

—Jeff Cox

Kohl's shares jump on offer from Oak Street

Kohl's Shares of the retailer jumped 7.5% following a report that private equity firm Oak Street Real Estate Capital has made an offer to acquire as much as $2 billion of the retailer's property.

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The offer would have the U.S. retailer lease back its stores, according to Reuters. It would also give Kohl's a chance to cut a deal with Franchise Group Inc, owner of the Vitamin Shoppe. Negotiations to sell itself to Franchise for almost $8 billion fell through in July.

— Tanaya Macheel

Those stocks that are last shall now be first

Week's worst performers rise on Friday

Week % Friday
Nvidia (NVDA)-13%1.2%
PVH (PVH)-13%0.0%
Mosaic (MOS)-11%3.5%
CF Industries (CF)-11%2.3%
Catalent (CTLT)-11%0.8%
Freeport-McMoRan (FCX)-10%3.2%
Seagate (STX)-10%2.1%
HP Inc. (HPQ)-9%1.0%
Monolithic (MPWR)-9%2.2%
Newell Brands (NWL)-9%2.4%

Some of this week's worst performers in the S&P 500 are posting some of the largest gains on Friday.

Nvidia is off more than 13% for the week thus far, but was recently higher by about 1.2%. The chip stock sold off this week following U.S. restrictions on chip sales to China.

A pair of fertilizer makers made the top of the screen. Mosaic is down roughly 11.5% for the week but up about 3.5% on Friday. CF Industries is also lower by about 11.5% for the week but ahead 2.3% today.

Other beaten up materials stocks are also popping. Copper producer Freeport McMoRan is down about 10% for the week but up more than 3% today, while lithium miner Albemarle is down 8% for the week but also gaining more than 3% Friday.

Three defensive stocks hit new highs

Friday's rally has pushed just three stocks in the S&P 500 to 52-week highs.

  • Cardinal Health ticked up about 0.7% to hit its highest level since March 2018.
  • AES Corp. added 3.1% to reach its highest mark since June 2021.
  • Constellation Energy, which was spun off from Exelon in January, is up 0.7% and trading at an all-time high.

The list is defensive, with a health care stock and two utility names show. That could suggest that investors aren't confident enough to jump back into riskier stocks even after a solid August jobs report.

— Jesse Pound, Christopher Hayes

S&P 500 reclaims 4,000

The S&P 500 touched the 4,000 level Friday morning, after dipping below it on Tuesday.

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Investors were keeping a close eye on the 3,900 level as stocks continued to fall over the next two days. Some suggested that the market has been set up for a rally, but cautioned that if the S&P failed to maintain 3,900, it could retest its mid-June lows.

— Tanaya Macheel

Goldman Sachs reiterates $2 price target on Bed Bath & Beyond shares

Goldman Sachs believes Bed Bath & Beyond's stock is still headed toward $2 despite the brand's recent efforts to turn around its struggling business.

"We reiterate our Sell rating with a 12-month price target of $2 given weak 2Q comp trends, along with ongoing inventory issues and negative consumer sentiment," wrote analyst Kate McShane in a note to clients.

The note from Goldman comes after the struggling retailer shared a strategic update earlier this week that included plans to close stores and trim its workforce by 20% in bid to reverse its continued cash burn.

— Samantha Subin

July factory orders show surprise decline

New orders for manufactured goods fell 1% in July, the Census Bureau said Friday, dropping for the first time this year.

The decline was a surprise, with economists surveyed by Dow Jones expecting an increase of 0.2%. The fall is a significant change from the revised growth of 1.8% in June.

Shipments, which had risen for sixteen straight months, fell 0.9%.

— Jesse Pound

Three-quarters point fed funds rate boost in September not off the table, investors say

Jim Paulsen, chief investment strategist at Leuthold Group, said August's nonfarm payrolls report isn't the final word for the Federal Reserve as to September rate policy.

"I think we'll have to get through the CPI report. This doesn't take 75 off the table but it leans it more toward 50," Paulsen said.

The Fed next meets in three weeks, on Sept. 20-21.

Greg Faranello of AmeriVet Securities said the fed funds futures had an 80% chance of a 75-basis point hike for September before the August jobs report. That has now fallen to just under 70%.

Ben Jeffery, BMO rate strategist, said the 2-year Treasury yield is moving the most Friday, reflecting lowered expectations for Fed rate hikes. The odds of a 75-basis point rate hike in September shifted slightly lower after the report.

August payrolls were "good in terms of the Fed's goals and it was pretty much consensus in terms of what the Street was looking for," Jeffery said. "It should offer a little bit of calm to the market after the volatility this week."

— Scott Schnipper and Patti Domm

Stocks open higher after strong August jobs report

Stocks popped at the open on Friday, extending gains from the final minutes of the previous session after the August jobs report came in about as expected.

The Dow Jones Industrial Average jumped about 140 points, or 0.5%, while the S&P 500 and Nasdaq Composite added 0.6% each.

The major averages are still on track to post their third consecutive down week.

— Tanaya Macheel

U.S. added 315,000 jobs in August

The August jobs report showed slowing but still solid employment growth, with the U.S. economy adding 315,000 jobs, the Bureau of Labor Statistics said Friday. Economists surveyed by Dow Jones were expecting growth by 318,000 jobs.

The unemployment rate rose to 3.7%, tying its highest level of the year, though that was due in part to an expansion of the labor force participation rate.

Stock futures moved higher after the report was released. The rising participation rate, along with a slower pace of wage growth, could be seen as a bullish development for the Federal Reserve's fight against inflation.

The jobs growth from the prior two months was revised down by a total of 107,000.

— Jesse Pound

Broadcom rises on earnings

Broadcom shares rose 2% in premarket trading after the chipmaker reported quarterly earnings and revenue that exceeded analyst forecasts and issuing stronger-than-expected revenue guidance for the current quarter. The company's CEO, Hock Tan, also said it's expecting strong demand to continue this quarter.

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— Tanaya Macheel

Oil higher, but on track for losing week

Oil prices rose on Friday ahead of the upcoming meeting between OPEC and its oil-producing allies, but commodities were still on track to end the week in the red.

West Texas Intermediate crude futures, the U.S. oil benchmark, advanced 1.7% to $88.06 per barrel on Friday. Global benchmark Brent crude added 1.5% to trade at $93.77 per barrel.

Energy companies were among the premarket winners. Occidental Petroleum and Devon Energy each gained about 2%. Exxon Mobil and ConocoPhillips were more than 1.5% higher.

For the week WTI is down 5.5%, while Brent has shed 7.2%. Global growth concerns as well as new lockdowns in China have weighed on prices.

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— Pippa Stevens, John Melloy

Daiwa downgrades Nvidia, says valuation needs a reset

Daiwa Capital Markets downgraded shares of Nvidia to neutral, saying in a note to clients that shares are trading too high given the uncertainty for the company going forward.

"If one assumes that a PE should match somewhat a growth rate, with top and bottom line growth being reduced materially over the next twelve months, and then uncertainty of the go forward normalized growth numbers, a PE of 42x FY23 is just too high," he wrote.

CNBC Pro subscribers can read more on the downgrade here.

— Samantha Subin

Oil rises as G-7 finance chiefs reportedly set to advance Russian oil price cap plan

Oil prices rose further in Asia's afternoon on a report that of G-7 finance ministers are expected to advance a plan to set a price cap on Russian oil.

Reuters reported that an unnamed European G-7 official said "a deal is likely," adding the extent of the specifics that will be publicized remains unclear.

Brent crude futures rose 2.22% to $94.41 a barrel and U.S. West Texas Intermediate crude futures rose 2.47% to $88.75 a barrel.

Prices also climbed earlier in the session ahead of an OPEC+ meeting slated to take place Sept. 5.

—Jihye Lee

European markets climb ahead of U.S. jobs report

European markets advanced on Friday to round out a bruising week, as investors await a key U.S. jobs report for indications on the health of the economy.

The pan-European Stoxx 600 added 0.7% in early trade, with autos climbing 1.7% to lead gains as almost all sectors and major bourses traded in positive territory.

- Elliot Smith

CNBC Pro: These outperforming stocks could be safe bets right now

Market volatility is on the rise, as fears mount that further interest hike rates to tackle inflation could come at the expense of economic growth. And there could be more pain ahead as the stock market now enters into what has traditionally been a "seasonally weak" period for equities.

But these low-volatility stocks have outperformed the market this year, and could have further upside ahead, according to analysts.

Pro subscribers can read more here.

— Zavier Ong

CNBC Pro: Wall Street pros issue warning on stocks. Here's what they say to buy instead

It's time to get out of stocks, some analysts have urged this week.

"We ... now believe the absolute return outlook for equities is outright unattractive in the coming months," Credit Suisse's Global Chief Investment Officer Michael Strobaek said in a note.

Here's what the pros say to buy instead, including the "best asset to own" during this stage of the investment cycle, according to Goldman Sachs.

Pro subscribers can read the story here.

— Weizhen Tan

Major averages on track for third negative week in a row

Even though the S&P 500 and Dow rose to end Thursday higher, the two averages and the Nasdaq are all on track to notch their third negative week in a row.

Through Thursday, the S&P 500 is down 2.24% week to date, and the Dow has shed 1.94% in the same timeframe. This week through Thursday the tech-heavy Nasdaq has slipped 2.94%.

If the three major averages do end the week lower, it will be the first negative 3-week streak since mid June.

—Carmen Reinicke

Lululemon surges on earnings beat

Shares of active retailer Lululemon surged more than 9% in after hours trading Thursday following the company reporting quarterly earnings that beat Wall Street estimates on the top and bottom lines.

The company reported adjusted earnings per share of $2.20 versus expectations of $1.87, according to Refinitiv. It also brought in $1.87 billion in revenue versus an anticipated $1.77 billion.

Click here to see what other stocks are moving after hours.

—Carmen Reinicke

Economists looking for slowed hiring in August jobs report

The August jobs report is due Friday morning from the Bureau of Labor statistics, and is the latest piece of economic data investors and the Federal Reserve will have to gauge the strength of the U.S. economy.

Economists expect that the economy added 318,000 jobs in August, according to Dow Jones. That's less than the surprisingly strong 528,000 jobs added in July, according to Dow Jones. In addition, the unemployment rate is expected to stay steady at 3.5% and average hourly wages are forecast to rise 0.4%, or 5.3% on the year.

The report is an important one as it's one of the last pieces of data the Fed will see before its September meeting, where it is set to raise its benchmark interest rate again.

Click here to read more.

—Carmen Reinicke, Patti Domm