(New York) The New York Stock Exchange fell sharply on Friday, frightened by worse-than-expected employment figures in the United States, raising fears of a slowdown in the world’s largest economy.
The Dow Jones Industrial Average fell 1.51% to 39,737.26 points, the tech-heavy NASDAQ fell 2.43% to 16,776.16 points. The broader S&P 500 index fell 1.84% to 5,346.56 points.
Bond yields have melted, suggesting that the Federal Reserve may soon need to cut rates more drastically than expected.
The U.S. unemployment rate in July rose more than expected to 4.3% from 4.1%, the Labor Department said before markets opened.
This is the highest unemployment rate since October 2021, representing 352,000 more unemployed people to 7.2 million.
Moreover, only 114,000 jobs were created last month, compared to 179,000 the month before (a sharply revised figure) and 185,000 expected.
“This jobs report is so weak that it could change the data for the Fed. The market is now 60% confident in the chances of a 50 basis point rate cut in September AND November,” said Chris Low of FHN Financial.
This represents a sharp change in market sentiment, as investors had previously anticipated a 25 basis point cut in September.
On the bond market side, yields were falling dramatically, anticipating the economy’s need for lower rates.
The ten-year rate on US Treasury bonds fell to 3.79% around 4:15 p.m., the lowest level in more than a year, compared to 3.93% the previous day and 4.15% at the start of the week.
The two-year rate, the most influenced by that of the Federal Reserve, fell to 3.94% against 4.14% the day before.
This deterioration in the jobs market, the prolonged contraction in manufacturing activity (ISM) and the comments of Fed chief Jerome Powell on Wednesday acknowledging in advance that he is now more concerned about jobs than inflation “have caused a psychological change in the market,” estimated Steve Sosnick, of Interactive Brokers.
“Are we moving from the hope of achieving a soft landing to the fear of a hard landing,” that is, a recession?
For Art Hogan of B. Riley Wealth Management, on the contrary, “the market overreacted.”
“Investors are ready to shoot first and ask questions later,” added the analyst interviewed by AFP, stressing that “the jobs market has remained solid over the last three months and that corporate results, overall, are good.”
Over the week, the Dow Jones lost more than 2% and the NASDAQ more than 4%.
On the stock market, microprocessor maker Intel fell 26.06% to $21.48, dragging down the NASDAQ, after disappointing second-quarter sales and earnings results.
The group lost, on paper, some 32 billion dollars in stock market valuation.
Intel has announced it will cut 15,000 jobs, or 15 percent of its workforce, to ultimately save $10 billion in operating costs.
Amazon, one of the largest capitalizations on Wall Street, a member of the NASDAQ and the Dow Jones, was sinking the indices, dropping 8.78% to $167.90.
The online commerce and cloud (remote computing) giant may have doubled its profits, but its turnover disappointed.
Shares of Snap, the parent company of Snapchat, fell 26.93%. The company reduced its losses to $249 million in the second quarter, from $377 million a year ago, but its forecast for the current quarter disappointed the market.
Chevron (-2.67%) saw its net profit decline due to a drop in refining margins. Revenue rose 4.7% to $51.18 billion, above expectations.
Toronto Stock Exchange
Canada’s main stock index fell Friday as major indexes covering energy, technology and financials all stumbled.
The S&P/TSX composite index closed down 495.58 points at 22,227.63.
The Canadian dollar was trading at 72.16 cents US, compared with 72.22 cents US on Thursday.
On the New York Commodity Exchange, crude oil prices fell $2.79 to $73.52 per barrel, while natural gas prices remained unchanged at $1.97 per thousand cubic feet.
The gold contract fell $11 to $2,469.80 an ounce and the copper contract gained two cents to $4.10 a pound.
The Canadian Press