Disappointing Jobs Data, Earnings Lead To Extended Sell-Off On Wall Street
August 02 2024 - 4:33PM
IH Market News
Stocks moved sharply lower during trading on Friday, adding to
the steep losses posted during Thursday’s session. With the
extended sell-off, the tech-heavy Nasdaq dropped to its lowest
closing level in two months and the S&P 500 hit a nearly
two-month closing low.
The major averages ended the day off their lows of the session
but still firmly negative. The Nasdaq dove 417.98 points or 2.4
percent to 16,776.16, the S&P 500 (SPI:SP500) plunged 100.12
points or 1.8 percent to 5,346.56 and the Dow tumbled 610.71 points
or 1.5 percent to 39,737.26.
Reflecting the sell-off seen over the past two days, the major
averages also moved sharply lower for the week. The Nasdaq
plummeted by 3.4 percent ,while the S&P 500 and the Dow both
slumped by 2.1 percent.
Concerns about the outlook for the U.S. economy continued to
weigh on Wall Street following the release of a closely watched
Labor Department report showing employment increased by much less
than expected in the month of July.
The report said non-farm payroll employment climbed by 114,000
jobs in July after jumping by a downwardly revised 179,000 jobs in
June.
Economists had expected employment to rise by 175,000 jobs
compared to the surge of 206,000 jobs originally reported for the
previous month.
The Labor Department also said the unemployment rate rose to 4.3
percent in July from 4.1 percent in June. Economists had expected
the unemployment rate to remain unchanged.
With the unexpected increase, the unemployment rate reached its
highest level since hitting 4.5 percent in October 2021.
While weaker than expected economic data has recently been a
positive for the markets amid expectations it would convince the
Federal Reserve to lower interest rates, traders now seem concerned
the Fed has waited too long and could lead the U.S. into a
recession.
“The economy and the stock market have been resilient because
unemployment has stayed low and consumers have kept spending, but
if that is no longer the case then the Fed has made a serious error
in keeping rates too high for too long,” said Chris Zaccarelli,
Chief Investment Officer for Independent Advisor Alliance.
Negative sentiment was also generated in reaction to the latest
earnings news, with shares of Intel (NASDAQ:INTC) plummeting by
26.1 percent after the semiconductor giant reported weaker than
expected second quarter results.
Online retail giant Amazon (NASDAQ:AMZN) also plunged by 8.8
percent after reporting weaker than expected second quarter
revenues and providing disappointing guidance for the current
quarter.
On the other hand, shares of Apple (NASDAQ:AAPL) moved to the
upside after the tech giant reported fiscal third quarter results
that beat analyst estimates on both the top and bottom lines.
Sector News
Semiconductor stocks saw substantial weakness following the
disappointing Intel results, with the Philadelphia Semiconductor
Index plunging by 5.2 percent to a three-month closing low.
Significant weakness was also visible among oil service stocks,
as reflected by the 5.2 percent nosedive by the Philadelphia Oil
Service Index.
With Amazon leading the way lower, retail stocks also saw
considerable weakness, dragging the Dow Jones U.S. Retail Index
down by 4.2 percent.
Computer hardware, airline and financial stocks also moved
notably lower amid broad based selling pressure on Wall Street.
Other Markets
In overseas trading, stock markets across the Asia-Pacific
region moved notably lower during trading on Friday. Japan’s Nikkei
225 Index plummeted by 5.8 percent, while Hong Kong’s Hang Seng
Index dove by 2.1 percent.
The major European markets also showed significant moves to the
downside on the day. While the German DAX Index plunged by 2.3
percent, the French CAC 40 Index tumbled by 1.6 percent and the
U.K.’s FTSE 100 Index slumped by 1.3 percent.
In the bond market, treasuries moved sharply higher, extending
the rally seen in the previous session. As a result, the yield on
the benchmark ten-year note, which moves opposite of its price,
plunged 18.4 basis points to a seven-month closing low of 3.792
percent.
Looking Ahead
Corporate earnings news is likely to take center stage next week
amid a relatively quiet week in terms of U.S. economic data.
SOURCE: RTTNEWS
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