Stocks continued to decline significantly in afternoon trading on Friday after an initial sharp drop early in the session. The major indices are extending the substantial losses incurred in the previous session, with the tech-heavy Nasdaq reaching a two-month intraday low.
At present, the Nasdaq has fallen by 466.78 points or 2.7 percent to 16,727.37. The S&P 500 is down 123.68 points or 2.3 percent to 5,323.00, and the Dow has decreased by 849.38 points or 2.1 percent to 39,498.59.
Concerns over the U.S. economic outlook are continuing to impact Wall Street following a closely monitored Labor Department report indicating that employment growth in July was much lower than anticipated.
The report revealed that non-farm payroll employment increased by 114,000 jobs in July after a downwardly revised rise of 179,000 jobs in June.
Economists had predicted an increase of 175,000 jobs, in comparison to the originally reported surge of 206,000 jobs for the previous month.
Furthermore, the Labor Department noted that the unemployment rate climbed to 4.3 percent in July from 4.1 percent in June, whereas economists had expected it to remain unchanged.
This unexpected rise pushed the unemployment rate to its highest level since October 2021, when it hit 4.5 percent.
While weaker-than-expected economic data has recently been seen as a market positive due to expectations that it might compel the Federal Reserve to lower interest rates, traders are now worried that the Fed has delayed action for too long, potentially leading the U.S. into a recession.
"The economy and the stock market have been resilient because unemployment has stayed low and consumers have kept spending, but if that changes, then the Fed has made a serious error in keeping rates too high for too long," commented Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.
Negative sentiment is also being driven by the latest earnings reports. Shares of Intel (INTC) plummeted by 27.3 percent after the semiconductor giant reported weaker-than-expected second-quarter results.
Online retail giant Amazon (AMZN) is also experiencing substantial weakness after reporting lower-than-expected second-quarter revenues and providing disappointing guidance for the current quarter.
Conversely, shares of Apple (AAPL) have moved upward after the tech giant reported fiscal third-quarter results that surpassed analyst estimates on both the top and bottom lines.
Sector Updates:
Semiconductor stocks continued to suffer significant losses following Intel's disappointing results, with the Philadelphia Semiconductor Index plummeting by 5.5 percent.
Oil service stocks also displayed substantial weakness, reflected in a 5.4 percent decline by the Philadelphia Oil Service Index.
With Amazon leading the downward trend, retail stocks have plunged, dragging the Dow Jones U.S. Retail Index down by 4.9 percent.
Financial, computer hardware, and networking stocks are also experiencing notable declines amidst widespread selling pressure on Wall Street.
Global Market Highlights:
In overseas trading, stock markets across the Asia-Pacific region saw significant declines on Friday. Japan's Nikkei 225 Index plummeted by 5.8 percent, while Hong Kong's Hang Seng Index dropped by 2.1 percent.
Major European markets also showed significant downturns. The German DAX Index fell by 2.3 percent, the French CAC 40 Index tumbled by 1.6 percent, and the U.K.'s FTSE 100 Index declined by 1.3 percent.
Bond Markets:
In the bond market, treasuries have moved sharply higher, continuing the rally from the previous session. Consequently, the yield on the benchmark ten-year note, which inversely correlates with its price, is down by 15.4 basis points to 3.823 percent.
