• The Dow Jones shed 200 points on Thursday as investors blink.
• US PMI figures came in mixed, with Services up but Manufacturing down.
• Investors await further signs of Fed rate cuts.

The Dow Jones Industrial Average (DJIA) shed some weight on Thursday, easing back around 200 points after a misfire in US Purchasing Managers Index (PMI) figures gave investors a reason to pause. US PMI prints further highlighted a softening in the US labor market, sending jitters through markets, which continue to bet that a Federal Reserve (Fed) rate cut in September will solve all of their problems.

US Manufacturing PMI figures tumbled back to 48.0 in August, well below the forecast steady print of 49.6. The US Services PMI unexpectedly tick upwards to 55.2 from 55.0 compared to the forecast decline to 48.0. Despite the upswing in Services PMI numbers, underlying employment figures continue to show a shortening in the US labor market, adding to concerns that were mostly ignored when the US Bureau of Labor Statistics retroactively wiped over 800K jobs from March’s Nonfarm Payrolls (NFP) print this week.

Markets continue to pine for a September cut, but Thursday’s PMI data sparked a pullback from a recent upswing into bets that the Fed would cut 50 bps on September 18. Rate markets have pulled back to a healthier overall expectation of a single quarter-point cut in September, pricing in around 75% odds of a 25 bps rate trim.