12:10 PM EDT, 08/02/2024 (MT Newswires) -- The Toronto Stock Exchange is in a downward spiral at midday, shedding near 600 points, or 2.5% as fears of a looming recession mount.

Energy and technology stocks are the biggest decliners, down 4.2% and 4%, respectively.

Oil prices weakened for a second-straight session early on Friday on demand concerns and flight from risk amid weakening stock markets despite heightened tensions in the Middle East.

But gold traded at a record high as the dollar and treasury yields tumbled after the latest data showed that the United States added far fewer jobs in July than expected, sending investors to the metal as a safe haven.

On the economic front, TD Economics said the U.S. job market continued to cool in July, and markets were upping the ante on rate cuts there. TD noted non-farm employment rose by 114k in July, considerably below the consensus forecast calling for a larger gain of 175k. Job gains in the two prior months were revised a bit lower, subtracting a combined 29k from the previously reported figures.

TD said: "Given the softening in labor market fundamentals, a September cut is almost a guarantee. The labor market is no longer adding to inflationary pressures and waiting much longer risks pushing recent normalization dynamics too far in the other direction." Following the release of this morning's report, TD noted, the 2-Year Treasury slipped by over 20 basis points (bps) and markets had moved to price in over 100 bps of easing by year-end.

According to CIBC, the balance of risks for a dual mandate central bank is now shifting towards too few jobs, rather than too much inflation. It noted today's rise in the unemployment rate would be consistent with what in the past has represented the start of a recession. CIBC said it will likely nudge its Q3 growth forecast down "somewhat", although for 2024 as a whole, the upside surprise in Q2 will be an offset.

CIBC noted bond yields fell and the market was pricing in over 100bps of easing and thus a chance of a 50bps cut at one of the next three FOMC meetings.

For BMO Economics, the bottom-line is that the large miss in July nonfarm payrolls and jump in the unemployment rate underlines what it has been seeing in the overall U.S. economic data for some time now that aggregate demand is softening rapidly. This clearly gives the Fed the green light to start cutting rates in September, and the market's attention will now shift focus toward how many and how deep the coming cuts will be, it added.