Nasdaq Tumbles Over 3% After Jobs Report Sparks Recession Fears

Forbes Business Breaking Nasdaq Tumbles Over 3% After Jobs Report Sparks Recession Fears Ty Roush Forbes Staff Ty Roush is a breaking news reporter based in New York City. Following Aug 2, 2024, 10:58am EDT Updated Aug 2, 2024, 10:59am EDT Share to Facebook Share to Twitter Share to Linkedin Topline Stocks across several industries
Nasdaq Tumbles Over 3% After Jobs Report Sparks Recession Fears

Nasdaq Tumbles Over 3% After Jobs Report Sparks Recession Fears

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Updated Aug 2, 2024, 10:59am EDT

Topline

Stocks across several industries fell Friday, after the Labor Department reported the U.S. economy added fewer jobs than expected last month, stoking fears of a possible recession.

Key Facts

The Dow Jones Industrial Average dropped over 700 points (1.9%) to below 39,600, as the S&P 500 and Nasdaq fell over 2% and 3%, respectively, as of around 10:45 a.m. EDT.

This is the first time the Dow has fallen below the 40,000 threshold since July 23 and paces the index for its worst day so far this year, ahead of a 1.5% dip on May 23.

The U.S. economy added 114,000 jobs in July, the Labor Department reported Friday, well below analyst projections of 185,000 new jobs, according to FactSet, as the unemployment rate rose to 4.3% from 4.1%, the highest level since unemployment hit 4.5% in October 2021.

The Cboe Volatility Index—often referred to as Wall Street’s “fear gauge”—increased by 3 points to 21.51, the index’s highest level since Oct. 27, implying increased volatility of the S&P over the next 30 days.

Intel led the broader market slide after its shares plummeted 29%, pacing the company for its worst day since 2000 after it reported disappointing earnings, said it was eliminating its dividend and eliminating 15% of its workforce— Amazon (11.9%), Nvidia (5.7%) and Boeing (5.6%) also had big drops Friday morning.

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Crucial Quote

Chris Rupkey, chief economist at the market research firm FwdBonds, reportedly said the “rising joblessness could drag the entire economy under,” noting, “Job losses of this magnitude have never happened outside of recessions.”

Key Background

Losses across several markets follow record-breaking gains earlier this week, after Nvidia’s shares rose 13% to add $329 billion in market capitalization. The S&P and Nasdaq indexes jumped to their best day since February on Wednesday, while the Dow has reached all-time highs in recent weeks. Federal Reserve Chairman Jerome Powell indicated an interest rate cut is “on the table” for the Fed’s next meeting in September, adding lower rates are “approaching.” Despite the market rally, some analysts suggest the Fed could be too late in cutting rates, including former Fed Vice Chair Alan Blinder, who urged the Fed to cut rates this month: “Why wait?”

Further Reading

ForbesStocks Race To Best Day In 5 Months As Lower Interest Rate Prospects Jolt Markets ForbesIntel’s 29% Nosedive Leads Massive Global Chip Stock Selloff As AI Hype Sours

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