Dow Futures briefly reached record highs on Friday before reversing direction to trade lower, following data indicating a slowdown in U.S. job growth for August. This development prompted investors to reinforce their expectations that the Federal Reserve may consider cutting interest rates later this month, potentially by as much as 50 basis points. Speculation regarding a more aggressive reduction in rates by the Fed led to a significant decline in Treasury yields and a depreciation of the U.S. dollar, while simultaneously propelling gold to a new record high nearing $3,600 per ounce. Lower interest rates, which may result in reduced borrowing costs for businesses, are typically perceived as advantageous for equity markets. Gold, lacking interest payments, typically performs well in environments characterized by low rates and heightened uncertainty.

Art Hogan, remarked that the current figure reinstates the possibility of a 50-basis-point rate cut at the forthcoming Federal Reserve policy meeting on September 17. “More significantly, I believe that a 75-basis-point increase before the end of the year is now virtually assured.” U.S. data indicated that nonfarm payrolls experienced an increase of merely 22,000 jobs last month, following an upward revision to 79,000 in July, thereby falling short of expectations for a gain of 75,000 positions.

The S&P 500 Index reached a peak of 6,532.65 points in early trading, subsequently retreating to a decline of 0.32%. The Dow Jones Industrial Average reached a record high shortly after the market opened, subsequently declining by 0.5%, whereas the Nasdaq Composite Index remained stable throughout the session. In accordance with anticipated reductions in interest rates, the two-year Treasury yield decreased by 6.4 basis points to 3.5277%, while the benchmark 10-year yield fell by 8.3 basis points to 4.0934%. Declining Treasury yields exerted downward pressure on the U.S. dollar, resulting in a 0.5% decrease in the dollar index, which stood at 97.747. A weaker dollar contributed to the strengthening of the euro, which increased by 0.6% to $1.17625.

In Europe, the STOXX 600 experienced a decline of 0.2%, the FTSE 100 remained stable, and France’s CAC 40 saw a decrease of 0.3%. Muted equity performance across the board resulted in the MSCI World Equity Index concluding with a modest increase of 0.13%. “The warning bell that rang in the labor market a month ago just got louder,” stated Olu Sonola. “A jobs report that fell short of expectations effectively confirms a 25-basis-point rate cut later this month.” Fed Chair Jerome Powell had previously bolstered expectations for rate cuts with an unexpectedly dovish address at last month’s Fed symposium in Jackson Hole. Recent days have witnessed a recovery in market sentiment following a decline in global stocks earlier this week, alongside long-dated bond yields in Europe reaching their highest levels in years. This shift in sentiment comes as investors express concerns regarding the financial conditions of several countries, notably Britain and France. Yields experienced a decline on Friday, with France’s 30-year yield recorded at 4.3873%, a decrease from its peak of 4.523% observed on Wednesday. Meanwhile, the UK’s 30-year yield stood at 5.553%, following a week where borrowing costs reached their highest levels since 1998. The benchmark yield on 10-year German government bonds stood at 2.7051%. Data released on Friday indicated that German industrial orders experienced an unexpected decline in July.

Following extensive negotiations, the United States has reached an agreement to implement reduced automotive tariffs on Japan. The dollar experienced a decline of 0.7% relative to the yen, positioning the pair at 147.5. Oil prices experienced a decline for the third consecutive day, as market participants await the upcoming meeting of OPEC and its allied producers this weekend. Brent crude futures concluded the trading session with a decline of 2.2%, settling at $65.50 per barrel, whereas U.S. crude experienced a 2.5% drop, finishing at $61.87. The energy commissioner of the European Union indicated that the bloc would be receptive to U.S. President Donald Trump’s proposal to cease purchasing Russian oil. Spot gold increased by 1.2% to $3,589.01 per ounce, following a peak of $3,597.66 earlier. The metal is poised to achieve its most significant weekly increase in almost four months.