CNBC Daily Open: Why markets aren’t always a good barometer for the economy

Mixed jobs report
The U.S. system added 142,000 nonfarm jobs successful August. That's less than the 161,000 expected by Dow Jones, but amended than July's revised 86,000. Unemployment successful August ticked down to 4.2% from 4.3% arsenic the labour unit grew 120,000 for the month.

Slumping stocks
U.S. markets fell Friday, with the Nasdaq Composite sliding 2.55% to extremity the week much than 10% disconnected its grounds close. All large indexes closed successful the reddish for the week. The pan-European Stoxx 600 scale mislaid 1.07%. The benchmark ended the week 2.5% lower, its biggest play nonaccomplishment successful a month.

Sinking oil
It wasn't conscionable the banal marketplace that had a atrocious week. The terms of U.S. crude lipid slumped 8% past week, clocking its worst week since June 2023. At its lowest, West Texas Intermediate's October declaration touched $67.16 per barrel. Next year's not going to beryllium immoderate better: Bank of America slashed its terms forecast for oil to $71 from $75.

Stiglitz and Yellen
Ahead of the jobs report, Nobel Prize-winning economist Joseph Stiglitz said the U.S. Federal Reserve raised rates "too far, excessively fast," and a 50-basis-point chopped would assistance some ostentation and jobs. Meanwhile, U.S. Treasury Secretary Janet Yellen reassured the public connected Saturday that she sees – and hopes to proceed seeing – "a good, coagulated economy."

[PRO] The bull limps on
The S&P 500 entered a bull marketplace astir 2 years ago, writes CNBC Pro's Michael Santoli, spurred by the content a brushed landing's the destination for the U.S. economy. But with the occupation marketplace softening uncomfortably rapidly and banal marketplace leaders losing momentum, it remains a question however overmuch the upcoming complaint cuts volition impact markets.

What bash markets cognize that we don't?

On Friday, the S&P 500 declined 1.73%, the Dow Jones Industrial Average mislaid 1.01% and the Nasdaq Composite sank 2.55%, capping disconnected a losing week for each large U.S. indexes.

Big Tech stocks were among the worst performers. The names down overmuch of this year's rally — Nvidia, Alphabet, Amazon — fell astir 4% connected Friday alone.

If the question of markets is simply a barometer for the wellness of the economy, past we're successful for immoderate atrocious times ahead.

That's, however, a precise large "if." Markets are little an Excel look than Word's often random autocomplete suggestions.

What we bash cognize from hard numbers is that the U.S. economy, portion not doing excessively great, isn't nearly arsenic atrocious arsenic stocks imply.   

Job additions successful August were substantially higher than successful July, portion the unemployment complaint dipped for the month. Yes, the header number's little than expected. But it breaks a downward-moving inclination from May, suggesting the U.S. occupation marketplace isn't moving successful the incorrect direction.

Sure, the jobs study looks to the past portion markets forecast the future. But the futures marketplace itself is betting connected a 65% accidental for a 25-point chopped successful September, and lone 35% for 50 points, according to the CME FedWatch tool.

That implies things successful the system aren't truthful atrocious that the Fed volition beryllium forced to marque a drastic cut. Adding to that, determination hasn't been immoderate factual quality oregon net reports that person affected the fundamentals of Big Tech.

Further, Goldman Sachs and the Atlanta Federal Reserve precocious revised their projection of third-quarter GDP upwards.

The banal market's downbeat week, then, seems "a sentiment-driven determination that's mostly driven by maturation concerns," said Emily Roland, co-chief concern strategist astatine John Hancock Investment Management.

Sometimes sentiment tells america things our gut knows but our encephalon doesn't. Other times, we request to archer ourselves consciousness and sensibility are often astatine likelihood with sentiment.

– CNBC's Jeff Cox, Sam Meredith, Samantha Subin, Pia Singh contributed to this story.