On Friday, benchmark equity indexes in the United States saw a notable retreat, significantly influenced by selloffs in shares of Intel and Amazon following their quarterly earnings reports. The Nasdaq Composite experienced a sharp decline of 2.4%, finishing at 16,776.2. Meanwhile, the S&P 500 fell by 1.8% to 5,346.6, and the Dow Jones Industrial Average dropped 1.5% to close at 39,737.3.
Among the sectors, consumer discretionary faced the steepest decline, plummeting by 4.6%, while consumer staples emerged as the leading gainers. For the week, the Nasdaq suffered a 3.4% drop, with both the Dow and S&P 500 each losing 2.1% of their values. In company-specific news, Intel saw its shares plunge by an alarming 26%, making it the worst performer across all three major indexes.
The semiconductor giant disclosed on Thursday that its Q2 financial results did not meet Wall Street expectations. In response to these disappointing results, Intel announced a $10 billion cost-cutting initiative, which includes reducing its workforce by over 15%, and also stated it would suspend its dividend payments starting in the fourth quarter.
Amazon was also among the worst performers, with an 8.8% decline in its stock on Friday. The e-commerce behemoth reported Q2 revenue figures that fell short of analysts' estimates, adding to the market's concerns. Contrastingly, MercadoLibre shares surged nearly 11%, marking it as the top gainer on the Nasdaq.
The company announced quarterly results that were stronger than anticipated. Apple Inc. managed a modest increase of 0.7% in its share price on Friday, following the release of its fiscal third-quarter results late Thursday, which exceeded expectations. The rise in iPad and Mac sales compensated for a decrease in iPhone sales, showcasing Apple’s resilience in a competitive market.
In the bond markets, the US two-year yield plummeted by 28.1 basis points, landing at 3.88%. The 10-year Treasury rate also saw a decline, dropping 17.8 basis points to 3.8%. On the economic front, the Bureau of Labor Statistics reported that the US economy added 114,000 jobs in the previous month. This figure lagged behind the consensus forecast of 175,000 job additions compiled by Bloomberg.
Additionally, the unemployment rate edged up to 4.3%, rising from June's figure of 4.1%, which was aligned with market expectations for July. The labor report provides the Federal Reserve with potential justification to consider cutting interest rates as early as September. BMO noted in a statement to its clients that market focus would now be on the magnitude and frequency of any forthcoming rate cuts.
Meanwhile, the Federal Open Market Committee of the central bank decided to maintain its benchmark lending rate steady at 5.25% to 5.50%, marking the eighth consecutive month of unchanged rates. Market participants are currently evaluating nearly a 75% probability of a more aggressive 50-basis-point rate cut next month, an increase from just 22% observed on Thursday, as indicated by the CME FedWatch tool.
In commodity markets, West Texas Intermediate crude oil prices fell by 3%, settling at $74 a barrel on Friday. Gold prices remained relatively stable at $2,479.50 per troy ounce, while silver saw a slight increase of 0.5%, reaching $28.63 per ounce..