Stock Market: Dow Plummets 600 Points Amid Weak Jobs Data and Global Sell-Off

Stocks Plunge Amid High Interest Rate Concerns

NEW YORK (AP) — Stock Market plummeted on Friday due to concerns that the U.S. economy is faltering under the burden of high interest rates intended to curb inflation.

S&P 500 and Dow Jones Decline

The S&P 500 fell 1.8%, marking its first consecutive losses of at least 1% since April. The Dow Jones Industrial Average dropped 610 points, or 1.5%, and the Nasdaq composite fell 2.4%. This sell-off extended globally, impacting markets worldwide.

Jobs Data Sparks Market Fears

A report showing a significant slowdown in hiring by U.S. employers last month alarmed investors, causing sharp declines in both stocks and bond yields. This followed earlier reports indicating a decline in U.S. manufacturing activity, an area particularly affected by high interest rates.

Federal Reserve’s Rate Hike Strategy Under Scrutiny

Just days earlier, U.S. stock indexes had surged after Federal Reserve Chair Jerome Powell hinted at potential rate cuts in September, suggesting inflation had slowed sufficiently. However, recent economic data has fueled concerns that the Fed’s prolonged high interest rates may have been excessive.

Economic Impact and Predictions

Brian Jacobsen, chief economist at Annex Wealth Management, remarked, “The Fed is seizing defeat from the jaws of victory. Economic momentum has slowed so much that a rate cut in September will be too little and too late.” He added that the Fed might need to implement a larger-than-usual rate cut to prevent a recession.

Market Bets on Rate Cuts

Traders now estimate a 70% probability that the Fed will cut its main interest rate by half a percentage point in September, despite Powell’s earlier comments dismissing such a deep reduction.

Economic Growth and Recession Risks

Although the U.S. economy continues to grow, a recession is not guaranteed. The Fed has been cautious, balancing the risks of being too aggressive with rate hikes against the danger of allowing inflation to rise unchecked.

Technology Sector Struggles

Big technology companies reported disappointing profits, contributing to the market downturn. Amazon’s revenue missed expectations, leading to an 8.8% drop in its stock. Intel suffered its worst day in 50 years, plummeting 26.1% after reporting poor profits and suspending its dividend.

Mixed Performance Among Tech Giants

Despite the overall tech sector decline, Apple rose 0.7% after reporting better-than-expected profits and revenue. However, other major tech stocks, which had driven market records earlier in the year, saw their momentum wane.

Smaller Companies and Broad Market Impact

The Russell 2000 index of smaller companies dropped 3.5%, more than the broader market. Stocks that had rebounded when tech stocks were falling also tumbled, reflecting fears that a fragile economy could hurt profits.

Bond Market Reactions

In the bond market, Treasury yields fell sharply as traders anticipated deeper rate cuts from the Federal Reserve. The yield on the 10-year Treasury dropped to 3.79% from 3.98% the previous day.

Global Market Movements

Internationally, Japan’s Nikkei 225 fell 5.8%, affected by the Bank of Japan’s interest rate hike. Chinese stocks dropped due to investor dissatisfaction with the government’s growth measures, and European markets saw indexes fall by more than 1%.

Commodity Price Volatility

Commodity prices experienced turbulence, with oil prices initially rising due to geopolitical tensions but later falling back on economic concerns. U.S. crude oil prices dropped below $74 per barrel after starting the week above $77.

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