In a significant shift, US benchmark equity indexes experienced a downward trajectory on Friday, primarily influenced by notable sell-offs in the shares of major tech giants, Intel Corporation and Amazon.com, following disappointing post-earnings results. As investors digested this financial news, the markets reacted sharply, leading to a substantial decline in major indexes.
The Nasdaq Composite Index recorded a considerable drop of 2.5%, settling at 16,760.3 points. In a similar vein, the S&P 500 Index decreased by 2%, bringing it down to 5,338.7. Furthermore, the Dow Jones Industrial Average fell by 1.7%, closing at 39,672.5. This widespread decline was particularly pronounced in the consumer discretionary sector, which bore the brunt of the losses, while consumer staples managed to remain the only sector in the green amidst the turmoil.
The sell-off in Intel shares was precipitated by a notable miss in their second-quarter financial results. Investors reacted swiftly, leading to a sharp decline in stock value. Similarly, Amazon faced a significant downturn, reporting a revenue miss for the same quarter, which contributed to the overall market pullback.
On the macroeconomic front, the US economy added 114,000 jobs in the last month, according to the Bureau of Labor Statistics (BLS). This figure was below the consensus expectation of a 175,000 gain, as per a survey conducted by Bloomberg. Additionally, the unemployment rate edged up to 4.3% from June's 4.1%, signaling a shift in the labor market that weighed on investor sentiment.
In relation to the bond market, the two-year treasury yield dropped sharply by 28.5 basis points, now standing at 3.88%, while the yield on the 10-year note also saw a decline of 18.2 basis points, falling to 3.8%. This drop in yields indicates investors’ caution amid the market volatility and adjustments in economic outlooks.
Furthermore, the price of West Texas Intermediate crude oil suffered a 3.4% decline, resulting in a price of $73.7 per barrel. This decline adds more complexity to the energy sector, reflecting broader economic concerns as markets grapple with inflationary pressures. In summary, the post-earnings sell-offs in tech stalwarts like Intel and Amazon have led to a marked decline in major US equity indexes, compounded by mixed economic signals regarding job growth and rising unemployment.
Investors will need to navigate these turbulent waters moving forward, keeping a watchful eye on upcoming earnings reports and economic data that could further influence market direction..