🤫 Softening job market

and stocks continue to slide

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Good morning investors! The market continues to struggle with Bitcoin still under $60,000.

Today we cover:

  • New job report shows a softening market

  • Mortgage demand is increasing

  • Stocks continue to tumble

📊 Economy and News 

Job openings fall as the market continues to soften

Job openings in July dropped to their lowest point in three and a half years, reaching 7.67 million, a decrease of 237,000 from June's revised figure and the lowest since January 2021.

Economists polled by Dow Jones had predicted 8.1 million openings.

This decline reduced the ratio of job openings to available workers to just under 1.1, roughly half of its peak ratio of more than 2-to-1 in early 2022.

The data likely strengthens the case for Federal Reserve officials to consider lowering interest rates at their upcoming policy meeting on Sept. 17-18. The Fed closely monitors the JOLTS report as a key gauge of labor market conditions.

While job openings fell, layoffs rose to 1.76 million, an increase of 202,000 from June. Total separations surged by 336,000, raising the separations rate to 3.4%. However, hiring also increased, climbing by 273,000, which brought the hiring rate to 3.5%, or 0.2 percentage points higher than in June.

A look at sectors: The professional and business services sector saw the largest increase in job openings, adding 178,000 positions. On the other hand, the private education and health services sector saw a decline of 196,000 openings, trade, transportation, and utilities dropped by 157,000, and government jobs, a significant contributor to job growth in recent years, decreased by 92,000.

Although the report raises concerns about a potential economic slowdown, it does not indicate a sharp decline in the labor market.

Global hits:

People want homes: Mortgage demand is now heavily skewed toward refinancing, as interest rates declined for the fifth straight week and applications increased 1.6% the final week of August, bolstered by an uptick in both purchase and refinance transactions. 

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.43% from 6.44% Applications for a mortgage to purchase a home did rise 3% for the week but are still 4% lower than the same week one year ago.

📈 Stocks

S&P 500 5,520.07 (-0.16%)
DJIA 40,974.97 (+0.093%)
NASDAQ 17,084.30 (-0.30%)
BRENT CRUDE 72.87 (-1.42%)
* Prices as of Sep 4th, 12:20 AM UTC

September continues to be a challenge

The S&P 500 and Nasdaq Composite both declined for a second consecutive session, marking a sluggish beginning to September.

Nvidia dropped -1.7% after a Bloomberg report revealed that the U.S. Justice Department issued subpoenas to the chipmaker. This follows a more than 9% plunge on Tuesday as semiconductor stocks faced widespread selling pressure. Notably, Nvidia's recent decline ranks among the worst in stock market history. For more on this, check our Instagram.

Furthermore, some large-cap technology and chip stocks showed signs of recovery, with Advanced Micro Devices and Tesla gaining approximately +3% and +4%, respectively. Meta Platforms, Marvell Technology, Broadcom, and Qualcomm also saw modest gains.

Treasury yield: Stocks managed to recover from their lows after the Treasury market's yield curve briefly returned to a normal pattern. Previously, the curve had been inverted, with the 10-year note yield falling below the 2-year yield—a common indicator of a potential recession that had investors concerned. On Wednesday, the 10-year yield briefly matched and slightly exceeded the 2-year yield.

Traders are bracing for increased volatility in September, with many expecting a market correction of 5% or more, as this period is historically challenging for equities.

Also check: Microsoft dodges in-depth UK probe into hiring of staff from AI firm Inflection.

Some earnings:

  • Dollar Tree fell more than -23% after the discounter cut its full-year outlook, citing increasing pressures on middle-income and higher-income customers. The store has felt pinched as their core customer makes trade-offs after a prolonged period of pricier food and everyday costs. Dollar Tree same-store sales for the company rose by 0.7% in the quarter.

  • Dick’s Sporting Goods on Wednesday blew past Wall Street’s earnings estimates in its fiscal second quarter and while the retailer did raise its full-year guidance as a result, the new outlook fell flat up against expectations.  The report sent the stock down -5%.

Reminder: US regulators want to investigate Shein and Temu over ‘deadly’ baby products.

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💵 Personal Finance

Are you 'behind' on retirement savings? - Part II

Let’s continue yesterday’s topic.

We recommend another method to calculate how much you need to retire: 25x your expected living expenses in retirement, so you can withdraw 4% without running out of money (per the Trinity Study).

The keyword is ‘expected’. Just because you spend $2,000 a month today doesn’t mean you will need $2,000 a month tomorrow. Inflation exists. Plus, you may need more money in the future due to other reasons such as increasing healthcare costs.

So, calculate your required amount using this formula and see how close you are to your goal.

The sad situation

People today just don’t have enough money. Most between 25 and 34 years old have an average 401(k) balance of $30,017, or a median $11,357. The situation is better for the older generation but still not good enough. The average 55 to 64 year old has only $207,874 on average and $71,168 median.

To keep you a little motivated, watch this video about retiring on $100,000.

Also, do not forget to use our retirement calculator to calculate the amount you need to retire.

💰 Be a Better Investor

“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments.”

Charlie Munger

Resources:

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👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.