Stock market news today: Nasdaq falls 10% from record high after disappointing jobs report
08/02/2024 21:06
The flight from stocks is accelerating as Big Tech earning misses add to recession jitters in the countdown to the July jobs report.
US stocks 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.
The Nasdaq Composite (^IXIC) dropped as much as 2.6% after the jobs report's release, plunging the index into correction territory, as it has lost more than 10% from its recent high in early July.
The Dow Jones Industrial Average (^DJI) slumped around 1%, or around 300 points, as a flight from stocks accelerated. The S&P 500 (^GSPC) sank 1.5%.
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.
Traders are pricing in three rate cuts this year — in September, November, and December — and bets are on a 50 basis-point reduction in September. The yield on the benchmark 10-year Treasury (^TNX) dived further below the 4% level after the labor-market update, trading around 3.84%.
The news for individual stocks was just as downbeat as the economic data, too, with chipmaker Intel's (INTC) bombshell earnings adding 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 25% in early trading, dragging on other chip stocks.
Meanwhile, Amazon stock slid almost 10% on the heels of sales guidance that undershot Wall Street estimates. Apple (AAPL) shares were a relative winner, up 1% after the company beat on earnings even as it reported a slide in iPhone sales.
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Stocks lose steam after July jobs report
US stocks lost ground on Friday, as investors pulled back after the release of 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.
The Dow Jones Industrial Average (^DJI) slumped around 1%, or around 300 points, as a flight from stocks accelerated. The S&P 500 (^GSPC) sank 1.5%, while the Nasdaq Composite (^IXIC) dropped as much as 2.3% after the jobs report's release.
Bad news is bad news
Yesterday, we noted the stock market's sell-off following poor earnings from Arm Holdings (ARM) and two poor economic data reports — initial claims and ISM manufacturing data — was a signal to investors that we were in a "bad news is bad news" environment.
That reminder is only more relevant this morning.
After a poor jobs report, stock futures were down across the board with tech leading the way lower.
A disastrous report from Intel (INTC) last night and weak profit guidance from Amazon (AMZN) didn't help matters. Nor did reports that Nvidia (NVDA) is facing a probe from the DoJ on antitrust complaints from its rivals.
But news flow, both good and bad, exists in all market environments.
And so what is most notable is less the confluence of events but how investors receive them.
And after an 18-month market environment when investors were eager to give companies, the economy, and any other bend in the road the benefit of the doubt, it appears there's been a big shift in this meta as we enter August 2024.
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.
