Investing.com — U.S. stocks fell sharply Friday as a much weaker-than-expected jobs report triggered fears the U.S. economy could be heading for recession and sparked a sharp jump in volatility.
At 12:19 ET (18:19 GMT), the fell 752 points, or 1.9%, the dropped 126 points, or 2.3% and the slumped 582 points, or 3.3%.
Weak payrolls triggers hard landing worries
The July official jobs report showed that fewer jobs were created last month than expected, with rising 114,000 last month, the lowest since January 2021, and down from a revised 179,000 in June. Economists had seen the July number at 177,000.
The also rose to 4.3%, up from 4.1% in June, while month-on-month average hourly wage growth came in at 0.2%, a drop from 0.3% the previous month.
“The sharp slowdown in payrolls in July and sharper rise in the unemployment rate makes a September interest rate cut inevitable,” said analysts at Capital Economics, “and will increase speculation that the Fed will kick off its loosening cycle with a 50 bp cut or even an intra-meeting move.”
The weaker data prompted many on Wall Street to call on the Fed to slash rates by 50 basis point at the September meeting.
JPMorgan joined Citi early on Friday calling for back-to-back 50 basis points cuts in September and November.
“We now think the FOMC cuts by 50bp at both the September and November meetings, followed by 25bp cuts at every meeting thereafterm” JPMorgan said Friday, adding that there was a “strong case” for the Fed to act before the Sept. 18 meeting.
About 80% of traders believe the Fed could cut by 50 bps in September, according to Investing.com’s Fed Rate Monitor Tool.
VIX jumps to 15 month highs; Treasury yields flag economic doom worries
Fears about the economy ushered a wave of volatility as the , or so-called fear index, hit three month highs, rising to 25.28, the highest level since March 2023.
In further sign of economic worry, the yield on 10-year Treasuries plunged 151 basis points to 3.824.
Intel, Amazon disappoint; Apple earnings beat estimates
Sentiment was also hit by poorly received earnings from tech giants Amazon (NASDAQ:) and Intel (NASDAQ:), which overshadowed positive numbers from iPhone manufacturer Apple (NASDAQ:).
Chipmaker Intel stock slumped over 27% as its June quarter earnings missed estimates. The company also suspended its dividend and said it will cut 15% of its jobs as part of a turnaround plan.
Amazon stock fell 9% after the e-commerce giant provided a softer-than-expected outlook on revenue, and warned that online sales were slowing as consumers grew more cautious over purchases.
By contrast, Apple stock traded 3% higher after the company reported stronger-than-expected revenue and profit in the June quarter.
This came on the back of slightly better than expected sales of its flagship iPhone, although device sales did fall from last year amid growing competition in top market China.
(Ambar Warrick and Senad Karaahmetovic contributed to this item.)
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