(Reuters) – The New York Stock Exchange ended lower on Friday, its second straight session of decline, and the Nasdaq Composite confirmed it was in correction territory, as investors fretted about weakening U.S. labor markets.

The Dow Jones index fell 1.61%, or 648.32 points, to 39,699.65 points.

The broader S&P 500 lost 103.56 points, or 1.90%, to 5,343.12.

The Nasdaq Composite fell 434.25 points (2.53%) to 16,759.89 points. It is down 10% from its closing high in July.

Over the week, the S&P 500 fell 2.06%, the Nasdaq 3.35% and the Dow Jones 2.11%.

The U.S. economy created fewer jobs than expected in July, but unemployment rose more than expected, the Labor Department’s monthly report showed Friday.

The data reinforced fears that the economy was slowing faster than expected and that the Federal Reserve was making a mistake by holding rates steady at its policy meeting that ended Wednesday.

Expectations for a 50 basis point rate cut at the Fed’s September meeting have climbed to 69.5% from 22% in the previous session, according to the CME’s FedWatch tool.

“Obviously the jobs number gets the headlines, but it seems like we’ve officially entered a rational world where bad economic news is seen as bad rather than … good,” said Lamar Villere, a portfolio manager at Villere & Co in New Orleans.

“The Fed is going to cut interest rates and we’ve all adjusted to that, it’s kind of settled. Now the question is, did they wait too long? Do we have a recession on our hands?”

Adding further pressure, disappointing quarterly results from Amazon and Intel have hurt the Nasdaq Composite, which has fallen more than 10% from its closing high in July.

This phenomenon thus confirms that the index is undergoing a correction after growing concerns about the valuations of technology giants in a weakened economy.

The CBOE Volatility Index, also known as Wall Street’s “fear gauge,” rose 20 points above its long-term average to hit 29.66, its highest level since March 2023.

The benchmark S&P and Dow Jones Industrial Average both suffered their biggest two-day declines in nearly two years. The small-cap Russell 2000 index fell to a near one-month low and posted its biggest two-day decline since June 2022. The Philadelphia SE Semiconductor Index hit a three-month low after posting its biggest two-day decline since March 2020.

Of the 11 major subsector indices in the S&P 500, only consumer staples gained. Consumer discretionary led the declines, with Amazon weighing on the index.

Among the stocks that ended in the green, Apple rose (+0.69%) after recording higher-than-expected iPhone sales in the third quarter and forecasting further gains, betting on AI.

( Kate Entringer)

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