In a significant downturn, US benchmark equity indexes experienced sharp declines during intraday trading, primarily influenced by the post-earnings sell-offs of major technology stocks, notably Intel and Amazon.com. As market participants scrutinized the latest jobs report, the Nasdaq Composite saw a drop of 2.7%, landing at 16,726.2 points as midday approached on Friday.
Concurrently, the S&P 500 fell 2.3% to reach 5,323.7, while the Dow Jones Industrial Average registered a decline of 2.1%, closing at 39,507.5. The consumer discretionary sector was notably hit the hardest, plunging 5.3%, whereas consumer staples emerged as the sole sector displaying gains. In company-specific news, Intel's stock plummeted by an alarming 27%, marking the most significant loss across all three major indexes.
The chip manufacturing titan disclosed its second-quarter financial results late Thursday, which unfortunately did not meet Wall Street's expectations. In response, Intel announced a stringent $10 billion cost-cutting strategy, which includes an anticipated layoff of over 15% of its workforce, and revealed plans to suspend dividend payments starting in the fourth quarter of this fiscal year.
Amazon, another heavyweight in the tech sector, did not fare much better. Its shares declined by 10% during the trading session on Friday, following the release of its second-quarter revenue figures, which also fell short of analyst predictions. In contrast, Apple demonstrated resilience in the chaotic market, with its shares climbing 2.9%.
This uptick positioned Apple as the top gainer on the Dow Jones and one of the leading performers on the Nasdaq. The tech giant's impressive fiscal third-quarter results were buoyed by increased sales of its iPads and Macs, compensating for a dip in iPhone sales. From an economic perspective, the backdrop remained unsteady as the US two-year Treasury yield slipped by 25.9 basis points to settle at 3.90% intraday, while the yield on the 10-year Treasury note decreased by 15.9 basis points to 3.82%.
The jobs situation for the country revealed a net addition of 114,000 jobs in the previous month, as announced by the Bureau of Labor Statistics. This figure fell short of the anticipated gain of 175,000 and indicated a rising unemployment rate, which climbed to 4.3% compared to June's 4.1%. This latest jobs report effectively signals the Federal Reserve, according to BMO in their client correspondence, granting them "the green light to start cutting rates in September." Market sentiment is presently leaning towards a likelihood of around 68% for a more significant 50-basis-point interest rate cut in the upcoming month, a stark increase from the previously estimated 22% observed on Thursday, as per the CME FedWatch tool.
The Federal Open Market Committee of the central bank maintained its benchmark lending rate between 5.25% and 5.50% during their recent meeting on Wednesday, marking the eighth consecutive pause in interest rate adjustments. Additionally, the price of West Texas Intermediate crude oil dropped by 4% to $73.33 a barrel during intraday trading.
In the commodities market, gold saw a minor decrease of 0.4%, pricing at $2,469.30 per troy ounce, while silver dipped by 0.3%, settling at $28.4 per ounce. Overall, the convergence of disappointing corporate earnings and a downward trend in job growth has contributed to a turbulent trading environment in the US equity markets..