The Nasdaq Composite (QQQ) is on the verge of entering a correction, plummeting more than 10% from its July peak following weak employment numbers and disappointing forecasts from Amazon and Intel. The Labor Department's report showed a rise in nonfarm payrolls by 114,000 in July, far below the expected 175,000, and the unemployment rate increased to 4.3%. This labor market data has fueled speculation that the Federal Reserve might implement a significant half-percentage-point rate cut in September.
Major indices suffered as the S&P 500 (SPY) hit its lowest level since July 11, and the Dow (DIA) was on track for its largest two-day percentage fall since early March 2023. Amazon's (AMZN) stock tumbled 11.7% after reporting slowing online sales growth, while Intel saw a 26.7% drop after its third-quarter revenue forecast fell short of estimates and it announced a dividend suspension. Other tech stocks, including Nvidia (NVDA), Broadcom (AVGO), and Micron Technology (MU), also experienced declines.
Market Overview:
- Nasdaq Composite nears correction territory.
- U.S. labor growth misses expectations; unemployment rate rises to 4.3%.
- Amazon and Intel's (INTC) disappointing forecasts weigh on tech stocks.
Key Points:
- S&P 500 and Dow face significant declines.
- Federal Reserve rate cut speculation increases.
- Broader tech sector, including Nvidia and Broadcom, also hit by negative sentiment.
Looking Ahead:
- Investors shift focus away from tech amid economic slowdown fears.
- Small-cap index Russell 2000 (RUT) down 3.3%, hitting a three-week low.
- Market volatility rises with Wall Street's "fear gauge" breaching long-term averages.
Amazon's report of slowing online sales growth led to an 11.7% drop in its stock, while Intel's forecast for third-quarter revenue below estimates and a dividend suspension triggered a 26.7% decline. Other chip stocks, including Nvidia and Broadcom, also saw significant losses, contributing to the Nasdaq's downturn. The Philadelphia SE Semiconductor Index hit a three-month low, falling 4.5%.
Apple (AAPL) managed a slight increase of 2.3%, buoyed by better-than-expected third-quarter iPhone sales and a positive outlook driven by AI advancements. Despite this, the overall tech sector faced broad declines, with Microsoft (MSFT), Alphabet (GOOGL), and Meta (META) also seeing drops. Wall Street's "fear gauge" reached its highest level since last October, indicating increased market volatility.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
