In the latest trading session, U.S. equity indexes experienced a decline as government bond yields increased significantly. This drop followed the release of August’s nonfarm payroll data, which revealed job growth falling short of market expectations. The report indicated an addition of only 142,000 jobs last month, in stark contrast to the anticipated increase of 165,000 jobs, as surveyed by Bloomberg.
Additionally, revisions for payroll figures from the preceding two months saw substantial downward adjustments, with July's job growth revised down to an increase of 89,000 and June's adjusted to 118,000, creating an overall net revision downward of 86,000 jobs. As a result, the S&P 500 index fell sharply by 1.8%, settling at 5,406.9.
The Dow Jones Industrial Average also faced a decline, dropping 1.1% to 40,320.2, while the Nasdaq Composite experienced an even steeper fall of 2.6%, closing at 16,683.9. Notably, all sectors reflected negative performance during the trading day. The technology, communication services, and consumer discretionary sectors led the downturn, indicating a broad-based sell-off. On the labor front, although the unemployment rate slightly improved to 4.2% from July's 4.3%, this minor reduction did little to offset the market's concerns regarding employment growth.
Furthermore, the CBOE's Volatility Index (VIX), often referred to as the fear index, surged by 18%, reaching a value of 23.45, mirroring investor anxiety over the economic landscape. In conjunction with the equity market's downhill trajectory, Treasury yields exhibited a downward trend. The yield on the 10-year Treasury fell by 4.2 basis points to 3.69%, while the two-year Treasury yield saw a decrease of 7.9 basis points, landing at 3.67%. In the commodities space, West Texas Intermediate crude oil faced a notable decrease, slipping 2.5% to $67.42 per barrel, influenced by the overall economic sentiment and demand forecasts. In corporate updates, Broadcom's ($AVGO) stock took a significant hit, plunging 9% during intraday trading, marking it as the worst performer on both the S&P 500 and Nasdaq Composite indexes.
This decline followed Broadcom’s announcement late Thursday, where they revised their fiscal Q4 revenue projection to approximately $14 billion, marginally below the analyst expectations of $14.04 billion as per Capital IQ. In other company news, JPMorgan recently downgraded Super Micro Computer ($SMCI) from an overweight rating to neutral.
Consequently, shares of Super Micro witnessed a notable decline of 6% during intraday trading, representing the second-largest decrease across the two indexes. The market's response to these corporate earnings forecasts highlights a cautious sentiment among investors amid macroeconomic concerns..