The stock market tumbled lower on Friday following a jobs report that missed expectations. The NASDAQ fell 2.4 percent, the Dow Jones Industrial Average dropped 1.5 percent, and the Standard and Poor 500 index lost around 1.8 percent of value.
The CBOE Volatility Index (VIX) reached a daily high of 29.66, the highest since March of 2023. The VIX measures volatility in the stock market, rising when there are relatively sudden and large flows of capital.
The $VIX just crossed above 28, highest since March 2023 during the regional bank crisis. There was an excessive amount of bullish sentiment a few weeks ago. Now moving quickly to fear. Many become more bearish as the market moves lower – you want to have the opposite mentality. pic.twitter.com/ztF7GL2pQO
— Charlie Bilello (@charliebilello) August 2, 2024
The July jobs report was released Friday morning, stirring concern among investors. Total nonfarm employment increased by 114,000, missing LSEG economists’ forecast of 175,000. The unemployment rate rose from 4.1 percent to 4.3 percent, despite expectations of no change. Jobless numbers have risen to their highest levels since October 2021.
Financial analysts are warning that the “Sahm Rule” has been triggered, suggesting a recession is developing. The Sahm Rule dictates that when the three-month average for the unemployment rate rises by 0.5 percent from its recent low, then a recession is beginning.
🚨JUST IN: U.S. RECESSION UNDERWAY.
According to the Sahm Rule it is.
Named after FED economist Claudia Sahm: a recession is likely if the unemployment rate (3-month avg) rises by 0.5% from its low.
Bloomberg reports it has been triggered.
“Three-month average for the… pic.twitter.com/6U3VULGTm7
— Genevieve Roch-Decter, CFA (@GRDecter) August 2, 2024
The Federal Reserve will meet on September 18 to vote on changing interest rates. Interest rate futures suggest that the Fed will lower interest rates by 50 basis points in September, and cut rates further in subsequent meetings.
BREAKING: Interest rate futures now have a BASE CASE of a 50 basis point interest rate cut at the September Fed meeting.
There is now a ~71% chance of a 50 basis point interest rate cut in September.
Is the Fed too late again? pic.twitter.com/rX0m9lGyTn
— The Kobeissi Letter (@KobeissiLetter) August 2, 2024
JPMorgan, $JPM, and Citi, $C, now predict the Fed to cut rates by 50 bps in September, 50 bps in November, 25 in December (!!!)
All changed in 24 hours where the probability of changing 50bps in September was only 11%!!!
— unusual_whales (@unusual_whales) August 2, 2024
Semiconductor manufacturer Intel’s stock plummeted on Friday, shedding 26 percent of value. The company had announced cutting 15,000 jobs, and a worrying forecast for future growth. The company also announced it was suspending dividend payments to shareholders beginning the fourth quarter of this year.
Amazon fell 8.8 percent after they released a discouraging outlook for third-quarter financial performance. Stock price retreated to a daily low of $160.55 per share, the lowest it has traded since January of this year.
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