Highlights
Equities cratered for a second straight day Friday after a surprisingly weak employment report added to recession fears. The Dow Jones industrial average fell 1.5 percent, the S&P 500 lost 1.8 percent and the Nasdaq dropped 2.4 percent on top of similar losses Thursday. Bond yields plunged, the dollar was mixed, and oil prices fell.
Much weaker than expected job data Friday, after a surprisingly soft manufacturing report Thursday, fed the narrative that the Federal Reserve has missed its chance to head off a hard landing for the economy. The U.S. Treasury 2-year note yield dropped an amazing 27 basis points and 10-year yields fell 18 basis points Friday as investors continued to dump risk assets and switch into safe havens. Markets are now fully priced for the Fed to start cutting rates with a 50 basis point move in September, with at least two more 25 basis point cuts by year end.
Technology shares led a broad selloff with chipmakers dropping in tandem with Intel, which plunged a remarkable 26 percent after announcing a big earnings miss, gloomy guidance, layoffs, and plans to suspend its dividend. Stocks in the artificial intelligence space, including Nvidia, the market darling, dropped after their remarkable run has taken them into what some analysts consider bubble territory.
Amazon was another notable loser after its quarterly revenues came in light and the company warned consumers are cutting back. Other weakest links included airlines, homebuilders, credit cards, banks, autos and machinery. Holding up relatively well were precious metals, utilities, food & beverage, telecom, managed care and tobacco.
Much weaker than expected job data Friday, after a surprisingly soft manufacturing report Thursday, fed the narrative that the Federal Reserve has missed its chance to head off a hard landing for the economy. The U.S. Treasury 2-year note yield dropped an amazing 27 basis points and 10-year yields fell 18 basis points Friday as investors continued to dump risk assets and switch into safe havens. Markets are now fully priced for the Fed to start cutting rates with a 50 basis point move in September, with at least two more 25 basis point cuts by year end.
Technology shares led a broad selloff with chipmakers dropping in tandem with Intel, which plunged a remarkable 26 percent after announcing a big earnings miss, gloomy guidance, layoffs, and plans to suspend its dividend. Stocks in the artificial intelligence space, including Nvidia, the market darling, dropped after their remarkable run has taken them into what some analysts consider bubble territory.
Amazon was another notable loser after its quarterly revenues came in light and the company warned consumers are cutting back. Other weakest links included airlines, homebuilders, credit cards, banks, autos and machinery. Holding up relatively well were precious metals, utilities, food & beverage, telecom, managed care and tobacco.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
