U.S. Markets Plunge Amid Weak Jobs Data and Tech Forecasts

The Nasdaq Composite is projected to enter corrective territory after a fall exceeding 10%. Weak jobs data and downbeat forecasts from tech giants Amazon and Intel have exacerbated fears of an economic slowdown. Major indices, including the S&P 500 and Dow, are experiencing significant declines.

On Friday, the Nasdaq Composite looked poised to slide into correction territory, decreasing by more than 10% from its July high. The drop follows disappointing employment numbers that have heightened concerns about a U.S. economic slowdown, with negative forecasts from Amazon and Intel further dampening market sentiment.

The S&P 500 plummeted to its lowest point since July 11, while the Dow was on track for its most significant two-day percentage drop since March 2023. New Labor Department figures indicated that nonfarm payrolls increased by just 114,000 jobs in July, falling short of the anticipated 175,000. The unemployment rate rose to 4.3%, up from the previous month's 4.1%.

Evidence of a weakening labor market has led traders to bet on a more substantial rate cut from the U.S. Federal Reserve in September. Jay Woods, chief global strategist at Freedom Capital Markets, remarked, 'Now the question isn't will they cut in September, but by how much.' This comes as the Sahm rule—a recession indicator—has been triggered, intensifying both recession talks and Fed criticisms.

At 9:55 a.m. ET, the Dow Jones Industrial Average fell by 458.84 points (1.14%) to 39,889.13. The S&P 500 dropped 82.67 points (1.52%) to 5,364.01, and the Nasdaq Composite declined 405.96 points (2.36%) to 16,788.19. Amazon shares plummeted by 11.7% following reports of slowed online sales growth, and Intel tumbled 26.7%, having issued a lower-than-expected third-quarter revenue forecast and suspended its dividend.

Other chip stocks followed suit, with Nvidia decreasing by 4.4%, Broadcom by 3.3%, Micron Technology by 5.7%, and Arm Holdings by 6.3%. The Philadelphia SE Semiconductor Index hit a three-month low, declining by 4.5%. Apple, however, increased by 2.3% on better-than-expected third-quarter iPhone sales, with future prospects buoyed by AI developments.

Consumer Discretionary led the decline among S&P 500 sub-indexes, targeting the largest one-day drop since September 2022, as tech giants like Microsoft and Alphabet shed roughly 2% each. Meta descended by 1.0% after a strong performance on Thursday. The Russell 2000 small-cap index was down 3.3%, reaching a three-week low and poised for its biggest two-day percentage drop since June 2022. Snap also fell, losing 22.8% on poor-quarter forecasts.

Declining stocks outnumbered advancers by a ratio of 3.04-to-1 on the NYSE and 5.28-to-1 on the Nasdaq. The S&P index recorded 55 new 52-week highs against 11 new lows, while the Nasdaq saw 22 new highs against 172 new lows.