August 03, 2024 (MLN): U.S. stocks sold off for a second straight session on Friday, and the Nasdaq Composite confirmed it was in correction territory after a soft jobs report stoked fears of an oncoming recession, as reported by Reuters.
The Nasdaq Composite closed down more than 10% from its July closing high to confirm the index is in a correction after concerns grew about expensive valuations in a weakening economy.
The S&P 500 closed at its lowest level since June 04.
Both the benchmark S&P index and the blue-chip Dow suffered their biggest two-day slides since March 2023.
The Dow Jones Industrial Average (DJI) fell 610.71 points, or 1.51%, to 39,737.26, the S&P 500 (SPX) lost 100.12 points, or 1.84%, to 5,346.56 and the Nasdaq Composite (IXIC) lost 417.98 points, or 2.43%, to 16,776.16.
The Labor Department said nonfarm payrolls increased by 114,000 jobs last month, well short of the 175,000 average forecast by economists polled by Reuters, and the at least 200,000 that economists believe are needed to keep up with population growth.
The unemployment rate jumped up to 4.3%, near a three-year high.
The data added to concerns the economy was slowing more rapidly than anticipated and the Federal Reserve had erred by keeping rates steady at its policy meeting that concluded on Wednesday.
The weak jobs data also triggered what is known as the "Sahm Rule," seen by many as a historically accurate recession indicator.
Expectations for a rate cut of 50 basis points (bps) at the Fed's September meeting jumped to 69.5% from 22% in the prior session, according to CME's FedWatch Tool.
"Obviously the jobs number is the big headline, but we seem to have officially entered at least a rational world where bad economic news is read as bad rather than bad economic news is read as good," said Lamar Villere, portfolio manager at Villere & Co. in New Orleans.
"The Fed is going to cut and we're all sort of adjusted to that, that is sort of established. Now it's more like hey, did they wait too long? Do we have a recession on our hands?"
Adding downward pressure was drop in Amazon (AMZN), down 8.79%, and Intel (INTC), which plunged 26.06% after their quarterly results and disappointing forecasts.
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Posted on: 2024-08-03T16:32:04+05:00
