Traders work on the floor of the New York Stock Exchange (NYSE) on August 1, 2024 in New York City.
Gina Moon | Getty Images
Stocks fell sharply on Friday after a much weaker-than-expected July jobs report raised concerns that the economy could be in recession.
The broad market index fell by 1.84% to close at 5,346.56 points. Nasdaq Composite The Dow Jones Industrial Average fell 610.71 points, or 1.51%, to close at 39,737.26. The 30-stock index fell 989 points, its lowest level of the session.
Stocks fell after U.S. job growth slowed more than expected in July, while the unemployment rate rose to its highest level since October 2021. The Labor Department reported that nonfarm payrolls grew by just 114,000 jobs last month, slowing from the 179,000 jobs added in June and below the 185,000 jobs forecast by economists polled by Dow Jones. The unemployment rate rose to 4.3%.
The yield on the 10-year U.S. Treasury note fell to its lowest level since December as investors flocked to bonds for safety amid concerns that the Federal Reserve made a mistake this week in keeping interest rates at their current levels.
Some of the largest cap names saw sharp losses during the day, as AmazonGoogle’s second-quarter results have raised investor concerns about the massive capital spending levels associated with artificial intelligence at big tech companies. The e-commerce giant’s shares fell 8.8% after it missed Street revenue estimates and issued a disappointing outlook. Intel CorporationMeanwhile, Apple shares fell 26% after announcing weak guidance and layoffs. Nvidia The Saudi stock market index fell 1.8%, after losing 6% the previous day.
The Nasdaq was the first of the three major indices to enter correction territory, falling more than 10% from its all-time high. The S&P 500 and Dow Jones are down 5.7% and 3.9% from their all-time highs, respectively.
Nasdaq Composite this year.
Adam Turnquist, chief technical strategist at LPL Financial, said Friday's declines were a “normal trajectory” in a bull market that is reversing after a sharp uptrend.
“The Nasdaq was very high in July, same with semiconductors. A lot of this enthusiasm for AI has not been tested in reality at this point,” he said, adding that “this is not the end of the AI story.”
But the selloff wasn’t limited to tech stocks on Friday. Bank stocks were also hit hard by recession fears, with Bank of America down 4.9% and Wells Fargo down 6.4%.
It’s been a volatile week, with the S&P 500 moving more than 1% in each of the past three trading sessions. Stocks rallied on Wednesday when the Federal Reserve gave a strong hint that an interest rate cut was coming at its next meeting in September. After Friday’s weak jobs numbers, many investors are starting to think the central bank should have taken action on Wednesday.
