US stocks tumble following jobs data

US stocks plunged on Friday following a significantly weaker-than-expected July jobs report, raising fears of a potential recession.

The broad market index dropped 1.84 per cent, closing at 5,346.56. The Nasdaq Composite fell 2.43 per cent to 16,776.16, pushing its decline from its recent all-time high to over 10 per cent. The Dow Jones Industrial Average tumbled 610.71 points, or 1.51 per cent, to end at 39,737.26. At its lowest point during the session, the 30-stock index had fallen 989 points.

Turning to US sectors, Consumer Staples, Utilities and Real Estate were the only sectors that closed higher on Friday. Consumer Discretionary was the worst performer by far, closing lower by over 4.5 per cent.

The market downturn followed a report showing that US job growth in July was slower than anticipated, while the unemployment rate climbed to its highest level since October 2021. Nonfarm payrolls increased by only 114,000 last month, down from the 179,000 jobs added in June and well below the 185,000 expected by economists surveyed by Dow Jones. The unemployment rate rose to 4.3 per cent.

Major tech stocks experienced significant losses, with Amazon falling 8.8 per cent after missing revenue estimates and issuing a disappointing forecast, sparking concerns about Big Tech’s high levels of AI-related capital spending.

Intel shares plummeted 26 per cent on Friday, marking their worst day in 50 years. The dramatic decline was triggered by a dismal earnings report and a massive restructuring plan.
Nvidia dropped 1.8 per cent, following a 6 per cent loss the previous day.

However, the sell-off wasn’t limited to technology stocks. Bank stocks were hit hard by recession fears, with Bank of America falling 4.9 per cent and Wells Fargo down 6.4 per cent.
It has been a volatile week, with the S&P 500 moving more than 1 per cent in each of the past three trading sessions. The stock market had rallied on Wednesday when the Fed hinted at a possible rate cut in its next meeting in September. Following Friday’s weak job figures, many investors now believe the central bank should have acted sooner.

Turning to commodities, global gold demand surged 4 per cent year-on-year in Q2 2024 to a record 1,258 tonnes, driven by robust OTC investment and continued central bank buying, while jewellery demand contracted due to elevated gold prices.

Futures

The SPI futures are pointing to a 1.5 per cent fall.

Currency

One Australian dollar at 7.40am was buying 65.14 US cents.

Commodities

Gold has lost 0.44 per cent. Silver has lost 0.30 per cent. Copper has gained 0.50 per cent. Oil has lost 3.66 per cent.

Figures around the globe

European markets closed lower on Friday. London’s FTSE fell 1.31 per cent, Frankfurt lost 2.33 per cent, and Paris closed 1.61 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei fell 5.81 per cent, Hong Kong’s Hang Seng lost 2.08 per cent, while China’s Shanghai Composite closed 0.92 per cent lower.

On Friday, the Australian share market closed 2.11 per cent lower at 7943.24.

Ex-dividends

QANTM Intellectual Property (ASX:QIP) is paying 7.1 cents fully franked.
Qualitas Real Estate Income Fund (ASX:QRI) is paying 1.1689 cents unfranked.

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap, Marketech.

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