U.S. stocks fell sharply on Thursday as weaker-than-expected jobs and manufacturing data sparked concerns about a rapid economic slowdown.
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What you need to know today
U.S. stocks retreat
U.S. stocks fell sharply on Thursday as weaker-than-expected jobs and manufacturing data sparked concerns about a rapid economic slowdown. The Dow Jones Industrial Average lost nearly 500 points to close 1.21% lower, the S&P 500 shed 1.37% while the Nasdaq Composite dropped 2.3%. The small-cap Russell 2000 index dropped 3%. Market sentiment headed south after a Labor Department report showed initial jobless claims at their highest levels since August last year, while the Institute for Supply Management’s index of U.S. factory activity contracted further in July. Gold rose while oil futures fell.
Treasurys gain
The benchmark 10-year Treasury yield fell below 4% for the first time since February as investors digested weak job numbers and braced for a September rate cut by the U.S. Federal Reserve. The 10-year yield last traded at 3.981%, down 12.3 basis points, while the two-year yield eased to 4.156%. Treasury yields and prices move in opposite directions.
Asian stocks tumble
Japanese stocks dropped 5.8% on Friday as Asia-Pacific markets reacted negatively to the sell-off on Wall Street. The Nikkei 225 touched its lowest level since February. SoftBank Group tumbled 8%, while trading houses Mitsui and Marubeni declined 10.5% and 8%, respectively. The yield on the benchmark 10-year Japanese government bond fell below 1%. Elsewhere, the Kospi shed 3.7%, the Hang Seng fell 2.3% while China’s CSI 300 dropped 0.89%.
Services boost Apple
Apple‘s quarterly results beat estimates as services revenue and iPad sales jumped. Total revenue rose 5% to $85.78 billion, coming in slightly ahead of consensus, while earnings per share of $1.40 was higher than the Street’s estimate of $1.35. Looking ahead, Apple expects services to grow by about 14%. Apple CEO Tim Cook told CNBC’s Steve Kovach the company has increased spending on Apple Intelligence to get it ready by fall. Apple shares inched higher in extended trading.
Amazon falls short
Amazon shares slid as much as 7% in extended trading after its quarterly results disappointed investors. While earnings per share of $1.26 came in well ahead of the $1.03 consensus, revenue for the quarter of $147.98 billion fell short of expectations due to tepid growth in the company’s core retail business. Amazon cited the ongoing Paris Olympics and U.S. presidential race as reasons for its subdued quarterly outlook. “We do see different traffic patterns during those events,” finance chief Brian Olsavsky told reporters during a call.
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The bottom line
With most of Big Tech’s earnings out of the way, investors are likely to turn their attention to Friday’s job report for clues on how quickly the employment market is weakening and whether the U.S. might slip into a recession.
The Bureau of Labor Statistics’ nonfarm payrolls report for July, set to be released Friday at 8:30 a.m. ET, is expected to show 185,000 jobs were created in July, down from 206,000 in June. Job gains have averaged 203,000 a month so far this year as the unemployment rate edges higher.
Most analysts predict the fall in job creation to be modest and in line with the gentle downshift the Fed is looking to engineer.
“If the Fed was going to manufacture the soft landing, this is probably what it was going to look like,” said Mike Reynolds, vice president of investment strategy at Glenmede.
News on the jobs front hasn’t been encouraging. On Thursday, chipmaker Intel said it would cut over 15% of its workforce as part of a $10 billion cost-cutting plan. The company also said that it will not pay its dividend in the fiscal fourth quarter of 2024 and that it will lower full-year capital expenditures by over 20%.
Online home goods retailer Wayfair is another company that’s pessimistic about the outlook.
“Our credit card data suggests that the category correction now mirrors the magnitude of the peak to trough decline the home furnishing space experienced during the great financial crisis,” Wayfair CEO Niraj Shah said in a news release.
— CNBC’s Jeff Cox, Jordan Novet and Gabrielle Fonrouge contributed to this report.