Wall Street today: S&P 500 set for worst day since 2022, tech-heavy Nasdaq crashes 3% on weak US jobs data

Wall Street today: S&P 500 set for worst day since 2022, tech-heavy Nasdaq crashes 3% on weak US jobs data/AFP

MINT | August 2, 2024 | 10:24 PM IST | Breaking News, World | Follow on Google News

Wall Street today: S&P 500 set for worst day since 2022, tech-heavy Nasdaq crashes 3% on weak US jobs data

Wall Street today: S&P 500 set for worst day since 2022, tech-heavy Nasdaq crashes 3% on weak US jobs data

Wall Street today: Wall Street losses deepened on Friday, August 2, with a sharp drop in US equities and US Treasury yields at multi-month lows after a weak jobs report fueled worries the US Federal Reserve has been too slow to cut key the interest rates, risking a more pronounced US economic slowdown.

Downbeat forecasts from Amazon and Intel hit the pricey Big Tech valuations—richly valued technology firms—exacerbating a selloff that brought the tech-heavy Nasdaq Composite index into correction territory. The cooler-than-expected jobs data stoked fears among traders that the US could be heading towards recession. 

An index or stock is widely considered to be in a correction when it closes 10 per cent or more below its previous record closing high. The S&P 500 was down 2.5 per cent in midday trading, potentially on pace for its worst day since 2022 and on track for its first back-to-back loss of over one per cent since April. The Nasdaq composite slumped over 10 per cent from its July peak as a sell-off for stocks whipped worldwide back to Wall Street.

Bears grip Wall Street over recession fears after US weak jobs data

A report showing hiring by US employers slowed last month by much more than economists expected sent fear through markets. It followed a batch of weaker-than-expected reports on the economy from a day earlier, including a worsening in US manufacturing activity, which has been one of the areas hurt most by high rates.

According to US jobs data, 114,000 US jobs were added in July, well below estimates, and the unemployment rate unexpectedly climbed for a fourth month to 4.3 per cent, renewing concerns that the economy is slowing. The figures follow Thursday’s data showing US manufacturing activity shrank in July by the most in eight months. 

Earlier this week, US Federal Reserve officials signalled that they are on course to cut rates in September, and the readings prompted traders to ramp up policy-easing bets. The S&P 500 hit its lowest level since June 5, and the index, along with the blue-chip Dow, is on track for its biggest two-day slides in nearly two years.

MSCI’s global stock gauge MSCI’s gauge of stocks across the globe fell 2.26 per cent to 785.26. The Dow Jones Industrial Average fell 569.93 points, or 1.41 per cent, to 39,778.04, the S&P 500 lost 119.44 points, or 2.19 per cent, to 5,327.24 and the Nasdaq Composite lost 560.79 points, or 3.26 per cent, to 16,633.36.

European stocks extended their slide after the jobs data exacerbated a rout in tech shares. The Stoxx 600 Index ended the session 2.7 per cent lower, the most in over a year. Investors took shelter in defensive stocks, with utilities and some pharmaceuticals, including AstraZeneca Plc and Sanofi SA, outperforming.

Emerging market stocks fell 23.92 points, or 2.20 per cent, to 1,063.88. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 2.27 per cent lower, 2.27 per cent, at 554.93. Japan’s Nikkei fell 2,216.63 points, or 5.81 per cent, to 35,909.70.

According to a Reuters analysis of LSEG data, over the last 44 years, the index has slipped into correction territory after hitting a new high 24 times, or about once every two years. The Nasdaq is still up 12 per cent year-to-date. The S&P 500 has lost about six per cent from its high and is also up 12 per cent this year. 

The Nasdaq’s tumble comes as investors turn more wary of the highly valued tech stocks that have led the charge higher for most of the year, driven by excitement over the potential of artificial intelligence (AI).

Lacklustre results from Tesla and Alphabet last month compounded worries about stretched valuations. At the same time, there may be concern that weaker-than-expected results reflect a broader softness in the economy.

US stocks today

Amazon.com fell 9% after it reported slowing online sales growth in the second quarter and said cautious consumers were seeking cheaper purchase options.

Intel tumbled 26% after forecasting third-quarter revenue below estimates and suspending its dividend, starting in the fourth quarter.

Other chip stocks were also set to extend Thursday’s losses. Nvidia and Broadcom lost 2% each, while Micron Technology and Arm Holdings were down around 7% each.

The Philadelphia SE Semiconductor Index hit a three-month low, set for its biggest two-day slide since March 2020.

Bucking the negative trend in megacaps, Apple rose 2.3% after posting better-than-expected third-quarter iPhone sales and forecasting more gains, betting on AI to attract buyers.

All the 11 S&P 500 sub-indexes slumped, with the Consumer Discretionary sector leading losses and on track for its biggest two-day drop since June 2022.

Major U.S. banks also fell for the second straight day on recession concerns, with the S&P 500 Financials and Banks indexes losing 3% and 4.7%, respectively.

Wall Street’s “fear gauge” breached the long-term average level of 20 points to touch its highest mark since last March.

Among other movers, Snap lost 24.7% after forecasting current-quarter results below expectations.

Chevron Corp fell 3.5% after the oil giant missed estimates for second-quarter profit.

Declining issues outnumbered advancers by a 4.23-to-1 ratio on the NYSE, and by a 5.74-to-1 ratio on the Nasdaq.

The S&P 500 posted 57 new 52-week highs and 15 new lows, while the Nasdaq Composite recorded 27 new highs and 248 new lows.

MINT