Stock market news today: Sell-off in US futures picks up pace after jobs report shows cooling
08/02/2024 20:00
The flight from stocks is accelerating as Big Tech earning misses add to recession jitters in the countdown to the July jobs report.
US stock futures tumbled across the board on Friday as the July jobs report showed more cooling in the labor market, fueling concerns the Federal Reserve's "higher for longer" interest-rate stance might end in recession.
Dow Jones Industrial Average futures (YM=F) slumped 1.2%, or around 500 points, as a flight from stocks accelerated. S&P 500 futures (ES=F) sank 1.6%, while Nasdaq 100 futures (NQ=F) dived 2.2% after the jobs report's release.
Stocks kicked off August with a sell-off after a clutch of data on Thursday showed cracks emerging in the US economy, wiping out gains spurred by expectations for a September interest-rate cut.
Wall Street has been wondering whether the economic slowdown shown in recent data means the Federal Reserve has kept interest rates at historic highs for too long, risking a recession.
The US economy added fewer jobs than expected in July, while the unemployment rate unexpectedly rose to 4.3%, the Bureau of Labor Statistics' nonfarm-payrolls report for July showed. Those additional signs of a slowdown in the labor market are likely to feed recession fears and rate-cut expectations alike.
Traders are pricing in three 25-basis-point cuts this year — in September, November and December — and bets are rising on one of them being 50 basis points. The yield on the benchmark 10-year Treasury (^TNX) dived further below the 4% level after the labor-market update, trading around 3.84%.
At the same time, chipmaker Intel's (INTC) bombshell earnings added to the pressure on stocks, with investors already questioning the payoff of AI investments for Big Tech.
The chipmaker said it will slash jobs and suspend dividends after its sales forecast fell short and it missed on earnings. Intel shares sank over 20% in pre-market trading, dragging on other chip stocks.
Meanwhile, Amazon stock slid over 8% on the heels of sales guidance that undershot Wall Street estimates, and Apple (AAPL) shares were little changed after it reported a slide in iPhone sales, though it beat on earnings.
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The US labor market slowdown continues
The US economy added just 114,000 new jobs last month while the unemployment rate unexpectedly rose to 4.3%, the highest since October 2021, as the July jobs report served as the latest sign of a summer slowdown in the US labor market.
Notably, the BLS said in its release that there were no discernible impacts from Hurricane Beryl, which slammed the greater Houston area in early July, in its report, saying, "the response rates for the two surveys were within normal ranges."
Friday morning's report also showed wage growth slowing, to 0.2% month-on-month and 3.6% year-over-year, while the underemployment rate — which includes those out of work as well as those working part-time but would prefer full-time work — rose to 7.8%.
What Intel's CEO told me with the stock crashing
I had a tough chat last night with Intel (INTC) CEO Pat Gelsinger following the company's whopper of an earnings miss, shockingly bad guidance, a dividend suspension and a 15% headcount reduction.
I appreciate he always steps up to the mic on Yahoo Finance (I have covered his entire Intel career) whether the quarter is good or bad, and this one was really not good at all. But wow with this one.
"This is the biggest restructuring of Intel I'd say since the memory microprocessor decision four decades ago," Gelsinger told me.
Gelsinger says he is in it for the long haul despite being disappointed in the quarter and outlook.
"This is what I signed up for [when I came in as CEO]," Gelsinger added.
As no surprise, the Street's reaction this morning is pretty brutal.
I left my chat with Gelsinger thinking Intel may not show green shoots of any kind (sales, margins, cash flow) deep into 2025. It's going to take some time to repair investor trust and drive a Street upgrade cycle on a stock that is now severely beaten down.
Tough to see on such an iconic American company.
