Highlights
A trifecta of weaker than expected employment reports spurred a risk-off move in stocks Thursday along with news from big technology firms adding to fears that the AI trade is overdone.
The Dow Jones industrial average and S&P 500 both fell 1.2 percent and the Nasdaq was down 1.6 percent. US Treasury yields, gold, and oil prices dipped and the dollar rose versus major currency pairs.
Markets already fretting over a weakening job market got news of higher than expected layoffs, much lower than expected job openings, and a surprising jump in jobless claims. These negative readings, in three admittedly volatile data series, boosted expectations for significant slowing in the economy and for rate cuts. That in turn, promoted more rotation out of megacaps and growth stocks into value/cyclical sectors that would be supported by rate cuts.
Separately, news that Google plans much higher capex spending related to AI hurt the stock while Qualcomm sold off on disappointing guidance amid concern that chip shortages would slow its business momentum. Among megacaps, losses in Amazon and Microsoft weighed on the major stock indexes. Software shares were hit again by the narrative that accelerating use of AI would undercut their business model.
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.