S&P 500 had its worst day in almost two years, Friday. Fears of recession soared after a surprisingly poor jobs report released for July.
The Dow Jones Industrial Average dropped 729 points or 1.8%.
Investors are bracing themselves for possible market turmoil as a result of the sharp drop.
Economic worries cause major indices to plummet
Stocks fell sharply in July due to a lower-than-expected job increase.
According to the Labour Department, nonfarm payrolls increased by just 114,000 jobs last month. This is a substantial drop compared with the 179,000 new jobs created in June. It also falls below the 185,000 predicted by economists. In addition, the unemployment rate rose to 4,3%, its highest level since October 20,21. This further intensified recession concerns.
A number of major technology firms suffered significant losses throughout the day. Amazon failed to achieve revenue expectations in the second quarter, and issued a disappointing outlook, which resulted in a 12.5% decline in stock prices.
The consumer discretionary industry, which has been experiencing its lowest day since the month of May 2022 when it dropped by 6.6%, was also affected.
Intel stock fell by 29 percent after it announced weak financial guidance and layoffs.
Nvidia saw its share price drop by more than 5,5% after a loss of 6% the day before.
The high capital expenditure by Big Tech firms on artificial intelligence has led to a growing concern about these losses.
The bond market responds to the stock selling-off
The 10-year Treasury rate fell to the lowest since December as investors looked for safety. It settled at 3.82%.
The shift to bonds can be seen as the natural outcome of a market that has experienced a sharp uptrend and is now experiencing a downward trend.
This week was marked by high volatility. The global stock market suffered a significant sell-off during the last session.
The stock market rose on Wednesday after the Federal Reserve suggested that rates could be cut by the end of September, while keeping the current rate.
Many investors believe the Central Bank should have acted sooner after Friday’s weak employment figures.
Recent stock market drops underscore the uncertainty that continues to exist in the economy.
Some investors see the downturn of the last few years as a normal correction. Others are worried about the wider implications that weak growth in the job market and high unemployment will have.
Watch closely the Federal Reserve’s meeting scheduled for September to see if there are any further signs of rate reductions and how the central bank views the economy.
Investors will have to be alert and flexible as the market navigates these turbulent conditions.
In determining the direction the market will take, the interplay of economic indicators, corporate performances, and central banks policies is crucial.
As the story unfolds, this post Wall Street mood deteriorates as Dow plunges more than 700 points amid recession fears could be updated.
