On Friday, US equity indexes experienced a significant downturn due to a large miss in July's nonfarm payrolls report, which sent government bond yields into a steep decline. This downturn was further exacerbated by disappointing quarterly results from Intel, adversely impacting the technology sector.
The Nasdaq composite fell by 2.5%, landing at 16,758.9 points, while the S&P 500 index saw a 2% decrease, closing at 5,333.2. The Dow Jones Industrial Average was not spared, experiencing a 1.9% drop to 39,572.1. Notably, all market sectors moved in a downward trajectory during intraday trading, with consumer discretionary and energy sectors taking the hardest hits.
In the realm of economic indicators, the Bureau of Labor Statistics reported that nonfarm payrolls expanded by just 114,000 jobs last month, a stark contrast to the consensus estimate of a 175,000 gain from a Bloomberg survey. The statistics showed downward revisions in job gains for June and May, with reductions of 27,000 and 2,000 jobs, respectively.
Additionally, the unemployment rate ticked up to 4.3%, as anticipated, from 4.1% in June. Monthly average hourly earnings saw a modest increase of 0.2% sequentially and 3.6% year over year; however, these figures fell short of Wall Street's expectations of 0.3% and 3.7%, respectively. In a notable shift in the bond market, Treasury yields plunged sharply.
The yield on the 10-year Treasury note nosedived by 14.4 basis points to 3.84%, while the two-year rate experienced an even greater decline of 23.4 basis points, landing at 3.93%. This plummet reflects the impact of weakening economic data on overall market sentiment, with the VIX (Volatility Index) surging 36% to reach 25.3 points.
Company-specific news was equally grim, especially for Intel, whose shares tumbled 26% intraday, marking it as the worst performer across both the S&P 500 and Nasdaq. This steep decline followed the company's announcement of a drop in earnings and sales during the second quarter. Furthermore, Intel revealed plans to halt dividend payments starting in the fourth quarter and is set to implement a $10 billion cost-cutting program comprising a significant reduction in headcount, estimated at over 15%.
Amazon.com also struggled on the market, seeing a 10% decline intraday. This drop followed the report of quarterly sales that fell short of analysts' expectations, prompting several brokerage firms to slash their price targets on the stock. Overall, the technology sector faced a substantial 1.5% slump intraday. Turning to commodities, West Texas Intermediate crude oil prices dipped 3.8%, settling at $73.38 a barrel..