U.S. stocks were sharply lower in late trading Friday following a weak July jobs report that underscored growing concerns about the weakening of the U.S. economy, while tech stocks reeled following disappointing earnings reports.
The Nasdaq Composite and S&P 500 were off 2.1% and 2.6%, respectively, while the Dow Jones Industrial Average slid 1.9%, a near-800-point drop. The major indexes tumbled Thursday amid a selloff in chip stocks, while fears mounted about an economy suffering under the weight of high interest rates.
Data released Friday by the Bureau of Labor Statistics showed that U.S. employers added far fewer jobs than expected in July, while the unemployment rate increased to 4.3% from 4.1% in June. Taken together with economic reports Thursday that showed weak manufacturing activity and lower construction spending, evidence is mounting that the economy is seriously slowing under the weight of the Federal Reserve’s policy of high interest rates.
The Fed has kept its influential lending rate at its highest level since 2001 in an effort to tame inflation. Earlier this week, after the central bank decided to leave interest rates unchanged, Chair Jerome Powell acknowledged progress on inflation and said the Fed could be in a position to cut interest rates as soon as September.
The yield on 10-year Treasurys, which is sensitive to expectations around interest rate cuts, plunged to around 3.80% and was at its lowest levels since December.
Dow component Intel (INTC) was leading the decliners Friday, losing more than a quarter of its value, after the chipmaker late Thursday announced a wider-than-expected quarterly loss and said it would lay off 15% of its staff as part of a massive cost-cutting effort. Other chip stocks, including AI investor favorite Nvidia (NVDA), Micron (MU) and Super Micro Computer (SMCI) were also down sharply.
Amazon (AMZN), another Dow member, was down about 9% after the e-commerce giant reported weaker-than-anticipated quarterly revenue and issued soft guidance for the current quarter. Fellow Magnificent Seven member Apple (AAPL) was up 2% after an earnings beat.
Gold prices hit another record high on Friday above $2,500 an ounce but were down slightly in late afternoon trading, while crude oil was down more than 3%. Bitcoin was down below $63,000, after rising to near $70,000 early in the week.
Markets Pricing in Bigger Fed Rate Cuts
1 hr 3 min ago
In the wake of Friday’s jobs report showing the labor market deteriorating unexpectedly sharply, the question on the mind of investors and economists is no longer whether the Federal Reserve will cut interest rates at its next meeting in September, but how steeply it will cut them.
Several forecasters changed their predictions for the central bank’s next moves, calling for three quarter-point rate cuts by the end of the year instead of two.
Financial markets priced in an even more aggressive path, with five rate cuts for 2024, up from three the day before, according to the CME Group’s FedWatch tool, which forecasts interest rate movements based on fed funds futures trading data. The likelihood priced in of a half-point cut at the September FOMC meeting is now 72.5%, up from 22% the day before.
The Fed is under pressure to respond to the weakening labor market because of its twofold mission to to keep inflation low and employment high. Recent reports have shown inflation falling towards the Fed’s goal of a 2% annual rate from its post-pandemic surge, and with the threat of rising unemployment growing larger, the central bank may shift its focus towards preventing mass layoffs.
Andrew Harnik / Getty Images
“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,” Scott Anderson, chief U.S. economist at BMO Capital Markets, wrote in a commentary.
Read the full article here.
Atlassian Plummets After Issuing Soft Guidance
2 hr 31 min ago
Shares of Atlassian (TEAM) sank as the business software provider posted disappointing guidance and announced its top sales executive is leaving the company.
The stock was down nearly 18% in recent trading at its lowest level in more than a year. It trailed only Intel on the list of big Nasdaq Composite decliners Friday.
TradingView
Atlassian expects fiscal 2025 first-quarter revenue of $1.149 billion to $1.157 billion. It sees fiscal 2025 revenue growth of 16%, below the 23% gain in fiscal 2024.
The company reported fiscal 2024 fourth-quarter adjusted earnings per share (EPS) of $0.66, with revenue up 20.5% to $1.132 billion. Both were in line with forecasts.
Snap Has Another Another Big Post-Earnings Move
3 hr 58 min ago
Shares of Snap (SNAP) plunged Friday after the social media company missed revenue estimates for the second quarter and offered lower-than-expected guidance, citing a weaker advertising environment.
The social-media company’s shares can move dramatically—in either direction—on its results, and today was no exception. The stock was down 25% in early-afternoon trading to its lowest level of the year.
TradingView
The operator of the Snapchat photo and video-sharing site reported second-quarter revenue rose 15.8% year-over-year to $1.24 billion, short of analysts’ projections. Average revenue per user of $2.86 was also below forecasts.
Snap said it anticipates current-quarter revenue in the range of $1.35 billion to $1.38 billion, below analysts’ estimates compiled by Visible Alpha.
Fear Gauge Jumps to Highest Level Since Late 2022
4 hr 50 min ago
The Cboe Volatility Index, or VIX, jumped to its highest level all year on Friday morning after a troubling jobs report exacerbated Wall Street’s fears about a weakening economy.
The VIX, a measure of expected market volatility, subsequently leaped nearly 10 points to as high as 28.25, its highest level since October 2022.
TradingView
The VIX, sometimes called the “fear index,” hummed along below 15, a relatively low level indicating stability, from early May to mid-July. Simultaneously, the S&P 500 steadily crept higher as investors became increasingly confident the U.S. economy was coming in for a soft landing.
But the calm in the markets was disrupted in mid-July when a soft inflation report sparked a sell-off in big tech stocks and rotation into small-caps. Volatility began to rise amid the rotation and has accelerated in recent weeks after some disappointing tech earnings reports and, this week, signs of a weakening labor market.
Amazon Slides on Soft Revenue Guidance
5 hr 52 min ago
Amazon (AMZN) shares were down 12% in recent trading after the e-commerce giant reported weaker-than-expected quarterly revenue and issued light current-quarter guidance, as consumers opted to purchase cheaper products, lowering the average selling price in its core retail business.
Although the company’s stock reached a record high last month, investors have been quick to book profits in the weeks since amid growing concerns over increasing competition from discount e-tailers and a slowdown in consumer spending arising from lingering inflation and higher interest rates.
A bearish engulfing pattern formed on Amazon’s chart leading into the company’s earnings report, a candlestick formation that warns of lower prices.
Amid post earnings selling, investors should monitor key support levels in Amazon shares at $170, $161, $145, and $123.
Read our full technical analysis here.
Intel Plunges More Than 25% After Weak Earnings
6 hr 30 min ago
Intel (INTC) shares tanked Friday after the chipmaker reported quarterly results that missed Wall Street quarterly estimates, issued soft current-quarter guidance, and unveiled a $10 billion cost-cutting plan that includes slashing 15% of its workforce.
The stock has continued to trend sharply lower on above-average volume since breaking down from an ascending channel in April.
Intel shares may attract bargain hunters at historically significant price levels including $26, $20, and $13.
Read our full technical analysis here.
Futures Point to Sharply Lower Open for Major Indexes
8 hr 15 min ago
Futures tied to the Dow Jones Industrial Average were down 0.8%.
TradingView
S&P 500 futures were off 1.2%.
TradingView
Nasdaq 100 futures were down 1.8%.
TradingView
