Fears that the high interest rates intended to drive up inflation may be straining the U.S. economy caused stocks to decrease dramatically on Friday. Fearing that the Federal Reserve made a mistake this week by maintaining interest rates at current levels, investors poured money into bonds in search of safety.
Indices Performance
S&P 500
The S&P 500 fell 1.8 per cent, The index saw a day low of 5,302.03 points in the trading session, marking the first consecutive days of losses of at least 1 per cent since April.
Large-scale sell-offs have affected a number of tech giants. After dropping more than 20 per cent from their recent peaks, Nvidia Corp. and Tesla Inc. have entered a bear market.
With the exception of Tesla, Microsoft Corp. and Amazon.com Inc. have both seen losses of over 10 per cent; however, these companies are still up for the year.
Among the largest decliners were Amazon and Intel Corp. Due to plans for significant AI spending, Amazon fell almost 9 per cent on Friday, while Intel fell 27 per cent after a dire forecast.
Dow Jones Industrial Average
The Dow Jones Industrial Average ended at 39,737.26, a sharp drop of 1.51 percent, or 610.71 points. The 30-stock index was down 989 points at the session's low.
Nasdaq Composite
With a 1.84 per cent decline, the broad market index Nasdaq Composite finished at 5,346.56. The tech-heavy index saw a decline of more than 10 per cent from its recent all-time high as the Nasdaq Composite lost 2.43 per cent to close at 16,776.16.
US jobs data
The unemployment rate increased to its highest level since October 2021, and job growth in the United States slowed more than anticipated in July, Stocks plummeted.
The Labor Department announced last month that nonfarm payrolls increased by just 114,000, less than the 185,000 economists polled by Dow Jones and a slowdown from the 179,000 jobs added in June. 4.3 per cent is now the official unemployment rate.
Market reaction on job data
Markets were shaken by a report that revealed hiring by US employers slowed last month by a significant amount, far more than market had predicted. As a result, stocks sharply declined.
It came after a series of less positive than anticipated economic reports the previous day, which included a deterioration in the manufacturing sector in the United States, which has been among the most negatively impacted by high rates.
Just a few days prior, Federal Reserve Chair Jerome Powell provided the most definitive signal, yet inflation has decreased sufficiently for rate cuts to start in September, which caused U.S. stock indexes to rise to their highest point in months.
