Disappointing Jobs Data, Earnings Lead To Extended Sell-Off On Wall Street

(RTTNews) - Stocks moved sharply lower during trading on Friday, adding to the steep losses posted during Thursday's session. With the extended sell-off, the tech-heavy Nasdaq dropped to its lowest closing level in two months and the S&P 500 hit a nearly two-month closing low.

The major averages ended the day off their lows of the session but still firmly negative. The Nasdaq dove 417.98 points or 2.4 percent to 16,776.16, the S&P 500 plunged 100.12 points or 1.8 percent to 5,346.56 and the Dow tumbled 610.71 points or 1.5 percent to 39,737.26.

Reflecting the sell-off seen over the past two days, the major averages also moved sharply lower for the week. The Nasdaq plummeted by 3.4 percent ,while the S&P 500 and the Dow both slumped by 2.1 percent.

Concerns about the outlook for the U.S. economy continued to weigh on Wall Street following the release of a closely watched Labor Department report showing employment increased by much less than expected in the month of July.

The report said non-farm payroll employment climbed by 114,000 jobs in July after jumping by a downwardly revised 179,000 jobs in June.

Economists had expected employment to rise by 175,000 jobs compared to the surge of 206,000 jobs originally reported for the previous month.

The Labor Department also said the unemployment rate rose to 4.3 percent in July from 4.1 percent in June. Economists had expected the unemployment rate to remain unchanged.

With the unexpected increase, the unemployment rate reached its highest level since hitting 4.5 percent in October 2021.

While weaker than expected economic data has recently been a positive for the markets amid expectations it would convince the Federal Reserve to lower interest rates, traders now seem concerned the Fed has waited too long and could lead the U.S. into a recession.

"The economy and the stock market have been resilient because unemployment has stayed low and consumers have kept spending, but if that is no longer the case then the Fed has made a serious error in keeping rates too high for too long," said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.

Negative sentiment was also generated in reaction to the latest earnings news, with shares of Intel (INTC) plummeting by 26.1 percent after the semiconductor giant reported weaker than expected second quarter results.

Online retail giant Amazon (AMZN) also plunged by 8.8 percent after reporting weaker than expected second quarter revenues and providing disappointing guidance for the current quarter.

On the other hand, shares of Apple (AAPL) moved to the upside after the tech giant reported fiscal third quarter results that beat analyst estimates on both the top and bottom lines.

Sector News

Semiconductor stocks saw substantial weakness following the disappointing Intel results, with the Philadelphia Semiconductor Index plunging by 5.2 percent to a three-month closing low.

Significant weakness was also visible among oil service stocks, as reflected by the 5.2 percent nosedive by the Philadelphia Oil Service Index.

With Amazon leading the way lower, retail stocks also saw considerable weakness, dragging the Dow Jones U.S. Retail Index down by 4.2 percent.

Computer hardware, airline and financial stocks also moved notably lower amid broad based selling pressure on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Friday. Japan's Nikkei 225 Index plummeted by 5.8 percent, while Hong Kong's Hang Seng Index dove by 2.1 percent.

The major European markets also showed significant moves to the downside on the day. While the German DAX Index plunged by 2.3 percent, the French CAC 40 Index tumbled by 1.6 percent and the U.K.'s FTSE 100 Index slumped by 1.3 percent.

In the bond market, treasuries moved sharply higher, extending the rally seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, plunged 18.4 basis points to a seven-month closing low of 3.792 percent.

Looking Ahead

Corporate earnings news is likely to take center stage next week amid a relatively quiet week in terms of U.S. economic data.