The Dow Jones Industrial Average plunged more than 800 points and the Nasdaq entered a correction on Friday, on track to fall more than 10% from its July record, as weak jobs data stoked fears of a slowing U.S. economy and pessimistic outlooks for Amazon and Intel dampened sentiment.
The Dow Jones Industrial Average fell 918 points, or 2.3%, to 39,429. The S&P 500 fell 2.5% and the Nasdaq lost 2.8%.
The S&P 500 is on track to hit its lowest level since July 11, while the Dow is on track to post its biggest two-day percentage drop since early March 2023.
The Labor Department reported that nonfarm payrolls rose by 114,000 in July, well below the 175,000 gain expected by economists polled by Reuters. The unemployment rate rose to 4.3% from 4.1% the previous month.
The new evidence of a weakening labor market has traders expecting the Federal Reserve to cut interest rates by a steeper half-percentage point in September, rather than the 25 basis point cut that was expected before the data was released.
“The question now is not whether they will cut rates in September, but by how much,” said Jay Woods, chief global strategist at Freedom Capital Markets. “With the thumb rule now officially in place, both the recession talk and criticism of the Fed will likely intensify.”
Amazon shares fell 12% after the company reported slowing online sales growth in the second quarter and said cautious consumers were looking for cheaper buying options.
Intel shares fell 27% after the company reported weaker-than-expected third-quarter earnings and suspended its dividend in the fourth quarter.
Other semiconductor stocks are expected to extend their losses on Thursday, with Nvidia down 4.4%, Broadcom down 3.3%, Micron Technology down 5.7% and Arm Holdings down 6.3%.
The Philadelphia SE Semiconductor Index fell 4.5% to its lowest in three months.
Apple’s shares rose 2.3% after the company forecast further profits on better-than-expected third-quarter iPhone sales and hopes that artificial intelligence will attract buyers.
Eight of the S&P 500’s 11 sub-indexes fell, with the consumer discretionary sector .SPLRCD leading the decline and on track for its biggest one-day drop since Sept. 13, 2022.
Other large stocks including Microsoft and Alphabet also fell about 2% each. Meta also fell, down 1.0% after surging on Thursday following strong earnings.
Concerns continue to linger over the dominance of a group of “Magnificent Seven” stocks, as earnings for most of these big tech companies have not pleased investors, highlighting fears that their companies may be overvalued.
Wall Street’s “fear index” surpassed its long-term average of 20 points, reaching its highest level since October last year.
The Russell 2000 small-cap index fell 3.3%, hitting its lowest in three weeks and its biggest two-day drop since June 2022.
Among other movers, Snap fell 22% after the company forecast weaker than expected earnings for the current quarter.
Oil giant Chevron Inc.’s shares fell 1.6% after it reported second-quarter profit that fell short of expectations due to weak refining margins.
