On Friday, the Dow Jones Industrial Average experienced a dramatic decline, plummeting over 900 points from top to bottom. This sharp drop followed the release of the US Non-Farm Payroll (NFP) jobs data, which came in significantly below forecasts, marking the worst initial print since 2019. The disappointing economic data has fueled investor concerns, leading to a surge in bets on potential rate cuts.
The Dow Jones Industrial Average (DJIA) experienced a significant drop on Friday, plummeting over 900 points from peak to trough following the release of the monthly US Nonfarm Payrolls (NFP) data, which reported its lowest initial figure since May 2019. Substantial revisions to previous figures further dampened market sentiment regarding the US employment situation, and a rising unemployment rate has prompted investors to anticipate a faster pace of rate cuts from the Federal Reserve (Fed).
The US NFP labor report for July revealed the addition of only 114,000 net new jobs, falling short of the forecasted 175,000. The previous month’s figure was revised downward to 179,000 from the initially reported 206,000. Additionally, the US Unemployment Rate increased to 4.3%, the highest level since November 2021, while the U6 Underemployment Rate rose to 7.8% from 7.4%, indicating that more employed individuals are struggling to find sufficient work hours.
Source: Create.vista.com
Average Hourly Earnings growth also slowed, rising by just 0.2% month-over-month compared to the expected 0.3%, with year-over-year wage growth cooling to 3.6% from the previous 3.8%.
As US economic data deteriorates, investors have extended a two-day market decline amid growing fears of a recession in the domestic economy. This has led to a flight from risk assets, causing equity indexes to fall broadly. According to the CME’s FedWatch Tool, rate traders have fully priced in a rate cut for September, with a 70% likelihood of a 50 basis point double-cut when the Fed announces its rate decision on September 18.
Dow Jones News
On Friday, two-thirds of the Dow Jones components were in the red, with modest gains overshadowed by significant losses in major tech stocks. Intel Inc. (INTC) saw a steep decline of 26%, falling below $21.50 per share after reporting quarterly revenue that fell short of expectations. The company earned $12.83 billion in the second quarter, a 1% decrease from the same period last year, and below the analyst forecast of $12.94 billion. Additionally, Intel revised its current-quarter revenue forecast to a range of $12.5 billion to $13.5 billion, below the expected $14.35 billion. In an effort to regain market confidence, Intel announced plans to reduce its workforce by 15% in the coming months to cut labor costs.
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