Stocks fell sharply on Friday in response to a disappointing jobs report that raised concerns about the weakening US economy. The Dow dropped 2.1%, the S&P 500 lost 2.5%, and the Nasdaq Composite declined 3%, placing it in correction territory. CNN’s Fear & Greed Index also fell to a “fear” reading of 26, reflecting negative market sentiment.
The Bureau of Labor Statistics reported that the US economy added only 114,000 jobs in July, well below economists’ estimates of 175,000 jobs added. The unemployment rate also rose unexpectedly to 4.3% from 4.1%. This data came after a recent increase in first-time jobless benefit applications and a decline in US manufacturing activity for the fourth consecutive month, indicating a slowing economy.
The weak economic reports raised concerns among investors about the health of the US economy, leading to a sell-off in stocks and putting all three major indexes on track for a weekly decline. This comes amid recent volatility in the market as investors react to the Federal Reserve’s comments on the job market and upcoming rate cuts, as well as the earnings reports of Big Tech companies.
The Federal Reserve has indicated a shift in focus towards maintaining labor market strength rather than solely addressing inflation, with Chair Jerome Powell highlighting the importance of job market stability. The Fed hinted at a potential rate cut in September, with traders expecting three rate cuts this year. This news initially boosted stocks but concerns about the economy have resurfaced following the weak economic data.
Big Tech earnings have also played a role in market movements, with mixed results impacting stock prices. Microsoft shares fell after missing revenue projections, while Apple and Amazon also experienced fluctuations in share prices following their earnings reports. Meta Platforms emerged as a standout performer after reporting solid quarterly earnings and raising its revenue outlook.
Investors have been shifting away from the top tech companies that have been leading the market to record highs, moving towards smaller stocks that could benefit from lower interest rates. This shift in sentiment has been reflected in the performance of tech stocks in recent days. Shares of Intel, for example, plummeted after reporting a revenue decline and income loss for the second quarter. The market continues to react to evolving economic indicators and corporate earnings reports.
