2024-09-06 20:43:10
The Dow Jones and S&P 500 have sunk into the red as concerns mount over the slowdown in the US jobs market.
The New York Stock Exchange ended sharply lower on Friday, weighed down by a poor employment figure that increased fears of a hard landing for the American economy. The Nasdaq index fell by 2.55%, while the Dow Jones fell by 1.01% and the broader S&P 500 index by 1.73%. “The market has moved into risk aversion mode”commented Steve Sosnick of Interactive Brokers. “And I don’t think it’s entirely the jobs report’s fault.”
The U.S. economy added just 142,000 jobs in August, compared with 175,000 expected by economists. The Labor Department also downgraded June and July figures by a combined 86,000. The release sparked a spike in volatility in the minutes after the New York market opened as traders digested the report.
Stocks sink into the red
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The Dow Jones and S&P 500 initially ventured into the green, the US 10-year bond rate rose, and the VIX index, which measures investor anxiety, gained almost 20%. But Wall Street, just as quickly, did an about-face, with stocks sinking into the red. “The market has been nervous since the beginning of the week”recalled Patrick O’Hare of Briefing.com, “and the combined effect of (semiconductor group) Broadcom‘s forecasts with weak job creation has encouraged this feeling of slowdown” of the economy.
Although Broadcom’s results (-10.36%) came in above expectations, participants were concerned about the weak growth (+5%) of the semiconductor business (the group also produces software) and forecasts that were considered timid. Despite the major indices going negative, “sales are regular”without heat stroke, Patrick O’Hare stressed. “It’s all done in an orderly manner.”insists the analyst, a sign that the market is not panicking. “Employment figures show a labor market that is losing energy, but not weak”Steve Sosnick said. “It shouldn’t have weighed so much because they were close enough to expectations.”
But the New York stock market decided otherwise, obsessed with the self-fulfilling prophecy that September would be the worst month of the year for stocks. For Steve Sosnick, the late August rally masked the fact that institutional investors were already starting to sell. This week, “Small investors started to follow them”according to the analyst. The market volatility on Friday reflects the lack of certainty among market participants. “The market is having a hard time deciding whether we’re going to have a soft landing or whether it’s going to be more violent.”explains Steve Sosnick.
Expectations around the Fed
Investors are still hesitant to bet massively on a half-point cut in the rate of the American central bank (Fed) in mid-September, even if two members of the institution did not close the door to this hypothesis on Friday. On the bond market, the movement towards assets considered safer, such as American Treasuries, as well as the prospect of a rate cut has caused a marked drop in rates.
The yield on 2-year US government bonds stood at 3.66%, compared to 3.74% the previous day at the close. The semiconductor sector, which has been battered in recent days, reacted badly to the publication of Broadcom, particularly Marvell Technology (-5.28%), Super Micro (-6.79%) and Arm (-4.71%). The driver assistance software specialist, Mobileye (-8.48%), cashed in on information from the Bloomberg agency according to which Intel was considering selling a fraction of its stake in the Israeli group.
Intel still owns around 88% of Mobileye shares, which will be listed on the New York Stock Exchange in October 2022. The steelmaker US Steel rebounded (+4.34%) after the CEO of Cleveland-Cliffs (-1.30%) said on Thursday that he was ready to take over assets from its competitor if the takeover by Nippon Steel did not succeed.
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Nasdaq vs S&P 500 graph
Understanding the Dow Jones, S&P 500, and Nasdaq: A Comprehensive Guide
The Dow Jones, S&P 500, and Nasdaq are three of the most widely followed stock market indices in the world. They are often used as benchmarks to gauge the performance of the US stock market. However, many investors are unclear about the differences between these indices and what they represent. In this article, we will provide a comprehensive guide to understanding the Dow Jones, S&P 500, and Nasdaq, including their composition, calculation, and significance in the world of finance.
What is the Dow Jones?
The Dow Jones, also known as the Dow Jones Industrial Average (DJIA), is a stock market index that consists of 30 large-cap companies in the United States. It is often considered a benchmark for the US stock market and is widely followed by investors and financial analysts. The Dow Jones is calculated using a price-weighted average of the 30 component stocks, with each stock’s price influencing the index’s value in proportion to its price per share [[1]].
What is the S&P 500?
The S&P 500, also known as the Standard & Poor’s 500, is a stock market index that consists of 500 leading companies in the United States. It is widely regarded as the best single gauge of large-cap US equities, covering approximately 80% of the US equity market [[1]]. The S&P 500 is a market-capitalization-weighted index, meaning that the companies with larger market capitalization have a greater influence on the index’s value.
What is the Nasdaq?
The Nasdaq is a stock market index that consists of all the stocks listed on the Nasdaq stock exchange. It is a market-capitalization-weighted index, with a bias towards technology and growth companies. The Nasdaq is often considered a benchmark for the technology sector, as it includes many of the largest and most influential tech companies in the world.
Differences between the Dow Jones, S&P 500, and Nasdaq
One of the main differences between the Dow Jones and the S&P 500 is the number of component stocks, with the Dow Jones consisting of 30 stocks and the S&P 500 consisting of 500 stocks. Another key difference is the calculation
Dow Jones all-time high
Stocks Sink into the Red: Dow Jones and S&P 500 Fall Amid US Jobs Market Concerns
The Dow Jones and S&P 500 indices plummeted into the red on Friday, driven by concerns over the slowdown in the US jobs market [[1]]. The US economy added only 142,000 jobs in August, below the expected 175,000, and the Labor Department also downgraded June and July figures by a combined 86,000 [[2]][[3]]. This news sparked a spike in volatility in the minutes after the New York market opened as traders digested the report.
The Nasdaq index fell by 2.55%, while the Dow Jones fell by 1.01% and the broader S&P 500 index by 1.73% [[2]]. According to Steve Sosnick of Interactive Brokers, “The market has moved into risk aversion mode” and it’s not entirely due to the jobs report’s fault [[2]]. The market’s nervousness has been building since the beginning of the week, and the combined effect of Broadcom’s forecasts with weak job creation has encouraged this feeling of slowdown in the economy [[2]].
Broadcom’s results came in above expectations, but participants were concerned about the weak growth of the semiconductor business and forecasts that were considered timid [[2]]. Despite the major indices going negative, “sales are regular” without heat stroke, Patrick O’Hare of Briefing.com stressed. “It’s all done in an orderly manner” [[2]], a sign that the market is not panicking.
However, the New York stock market decided otherwise, obsessed with the self-fulfilling prophecy that September would be the worst month of the year for stocks. For Steve Sosnick, the late August rally masked the fact that institutional investors were already starting to sell. This week, small investors started to follow suit, contributing to the market’s decline [[2]].
The employment figures show a labor market that is losing energy but not weak, according to Steve Sosnick [[2]]. The market’s reaction to the jobs report may be an overreaction, as the numbers were close enough to expectations [[2]].
the Dow Jones and S&P 500’s decline on Friday is a sign of the market’s growing concerns over the slowdown in the US jobs market. The weak employment figures, combined with Broadcom’s lackluster forecasts, have encouraged a risk-averse sentiment in the market. As the market continues to digest the news, investors will be closely watching for signs of a hard landing for the American economy.
References:
[1] Reuters: S&P 500, Dow end lower ahead
