### Major U.S. Index Futures Signal a Sharply Lower Open
Futures for major U.S. indexes point toward a considerably lower open on Friday, suggesting that stocks may further extend the previous session's sell-off.
### Economic Uncertainty Weighs on Wall Street
Investors remain cautious about the U.S. economic outlook following a significant Labor Department report. The report revealed that employment rose by only 114,000 jobs in July, markedly lower than the expected 175,000 jobs. This follows a downward revision to June's figures, which now stand at 179,000 jobs from an initially reported 206,000. Additionally, the unemployment rate unexpectedly climbed to 4.3% in July from 4.1% in June—its highest level since October 2021.
### Market Concerns About Federal Reserve Actions
Weak economic data, which investors had previously viewed as a potential trigger for Federal Reserve interest rate cuts, now raises fears that the Fed's delay could steer the economy into a recession.
### Disappointing Earnings Reports
Negative sentiment is also fueled by recent earnings announcements. Intel (INTC) shares plummeted 24.5% in pre-market trading after the company's second-quarter results fell short of expectations. Similarly, Amazon (AMZN) saw substantial pre-market declines due to weaker-than-expected second-quarter revenues and disappointing guidance for the current quarter. Shares of Apple (AAPL) also moved lower in pre-market trading, despite the company's fiscal third-quarter results surpassing analyst estimates on both the top and bottom lines.
### Thursday’s Market Performance
On Thursday, stocks experienced a sharp decline after a brief early-session rally. The tech-heavy Nasdaq tumbled 405.25 points (2.3%) to 17,194.15, the S&P 500 fell 75.62 points (1.4%) to 5,446.68, and the Dow dropped 494.82 points (1.2%) to 40,347.97. Concerns about the U.S. economic outlook overshadowed optimism about a potential near-term interest rate cut by the Federal Reserve.
### U.S. Manufacturing Activity Contracts
The Institute for Supply Management reported that U.S. manufacturing activity contracted more sharply in July, with the manufacturing PMI falling to 46.8 from June's 48.5. A reading below 50 indicates contraction, and this latest level is the lowest since November 2023. According to Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, demand remains subdued due to companies' reluctance to invest in capital and inventory amidst current federal monetary policies and other conditions.
### Rising Unemployment Claims
The Labor Department also noted a rise in first-time unemployment claims, which hit their highest level in almost a year. Initial jobless claims increased by 14,000 to 249,000 for the week ended July 27, exceeding economists' expectations of 236,000.
### Sector-Specific Performance
Sentiment was initially buoyed by positive earnings from Meta Platforms (META), but semiconductor stocks saw considerable pullback, with the Philadelphia Semiconductor Index plunging 7.1%. Airline stocks also declined significantly, dragging down the NYSE Arca Airline Index by 5.6%. The Philadelphia Oil Service Index dropped 4.0%, reflecting notable weakness among oil service stocks. Steel, computer hardware, and networking stocks also faced notable declines. However, interest rate-sensitive utilities and real estate stocks bucked the downward trend.
### Commodities and Currency Markets
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This summary reflects a cautious and analytically-driven tone, capturing the critical movements and economic indicators affecting the market while maintaining the original article's meaning and information.Crude oil futures continued their descent, dropping $1.26 to settle at $75.04 per barrel, following a previous decline of $1.60 to $76.31 per barrel on Thursday. Conversely, after a modest increase of $7.80 in the prior session, gold futures surged by $34.80, reaching $2,515.60 per ounce.
In currency markets, the U.S. dollar traded at 147.16 yen, a notable decrease from the 149.36 yen registered at Thursday's close in New York. Against the euro, the dollar's value rose to $1.0860, compared to $1.0791 the previous day.
**Asia**
Asian equities experienced their steepest decline since 2022 on Friday, with Japan leading the regional downturn. Markets were rattled by recession fears, exacerbated by weak U.S. manufacturing and labor market data, revealing potential vulnerabilities in the world's largest economy.
Escalating tensions in the Middle East and disappointing earnings from giants like Amazon and Intel further depressed investor sentiment towards riskier assets.
The drop in U.S. treasury yields provided a boost for gold prices, while oil prices saw a partial recovery during Asian trading hours after OPEC+ ministers decided to maintain the current oil output policy.
Investors awaited the release of U.S. payroll data, anticipated later in the day, which could provide further insights into the state of the economy and the Federal Reserve's monetary policy trajectory.
China's Shanghai Composite Index fell by 0.9% to 2,905.34 amid ongoing concerns about the nation's economic outlook. Similarly, Hong Kong's Hang Seng Index plunged by 2.1% to 16,945.51 due to a global tech sell-off driven by recession worries in the U.S.
Japanese markets recorded their most significant losses since 2020, fueled by rising interest rate concerns. The Nikkei 225 Index plummeted by 5.8% to 35,909.70, marking its second-largest point drop in history, with technology stocks bearing the brunt and a stronger yen adversely affecting exporters. Meanwhile, the broader Topix Index declined by 6.1% to 2,537.60, reflecting widespread selling.
In South Korea, the Kospi Index fell by 3.7% to 2,676.19, significantly impacted by declines in technology and semiconductor stocks. Notably, Samsung Electronics dropped by 4.2% and SK Hynix plunged by 10.4%.
Australia's markets faced a sharp correction following record highs in the previous sessions. The benchmark S&P/ASX 200 Index fell by 2.1% to 7,943.20, led by declines in miners and financial stocks. The broader All Ordinaries Index also fell by 2.1% to 8,170.40. Across the Tasman Sea, New Zealand's benchmark S&P/NZX-50 Index dipped by 0.3% to 12,453.04.
**Europe**
European markets extended their losses on Friday against a backdrop of investor caution due to fears that the U.S. Federal Reserve's delayed interest rate cuts could harm the economy.
On the economic front, French industrial production showed signs of recovery in June, driven primarily by a rebound in transport equipment output, as reported by INSEE, the national statistics office. Industrial production grew by 0.8% month-on-month in June, following a 2.2% decrease in May, though this was below the anticipated 1.0% growth. Manufacturing output also improved by 0.8%, reversing May's 2.7% decline.
The German DAX Index dropped by 1.4%, while France's CAC 40 Index decreased by 0.6%, and the UK's FTSE 100 Index edged down by 0.1%.
Tech stocks faced substantial selling pressure following Intel's announcement of plans to cut more than 15% of its workforce in a significant cost-cutting measure. ASM International plunged by 9.4%, BE Semiconductor by 7.5%, ASML by 6.5%, and Infineon Technologies by 3.4%.
French insurer AXA saw a 2.3% rally as its subsidiary, AXA Investment Managers, entered negotiations to sell its investment arm to BNP Paribas in a €5.1 billion deal. Meanwhile, BNP Paribas shares fell by 1%.
Energy company Engie climbed by 3.3% after raising its profit guidance for 2024, citing strong first-half performance in power generation and lower-than-anticipated financial costs.
UK outsourcing firm Capita experienced a nearly 3% decline following a reported drop in first-half revenue. Wizz Air Holdings fell by 4% due to a reported decrease in passenger numbers and seating capacity in July.
In contrast, British Airways' owner IAG surged by 6.3%, buoyed by robust first-half results and plans to issue a dividend for the first time since the onset of the Covid-19 pandemic. GSK rose by 2.3% following U.S. FDA approval of its Jemperli treatment in combination with chemotherapy.
**U.S. Economic Reports**
The U.S. Labor Department released a highly anticipated report on Friday, indicating that employment growth in July was significantly lower than expected.The report indicates that non-farm payroll employment increased by 114,000 jobs in July, following a revised increase of 179,000 jobs in June. Initially, economists anticipated an employment rise of 175,000 jobs, compared to the originally reported surge of 206,000 jobs for the previous month.
Furthermore, the Labor Department announced that the unemployment rate saw a rise to 4.3 percent in July from 4.1 percent in June, contrary to economists' expectations of no change. This unexpected increase marks the highest unemployment rate since it hit 4.5 percent in October 2021.
At 10 AM ET, the Commerce Department is set to release its report on new orders for U.S. manufactured goods for June. Factory orders are projected to decrease by 2.9 percent in June, following a 0.5 percent decline in May.
