Concerns about mixed results from technology companies and the slowdown in the US economy, judging by July employment data, have pushed the Nasdaq Composite index into correction territory, which fell 10% below its all-time high on Friday. The technology index lost 2.4% on Friday after the publication of the Employment and unemployment data, which rose for the fourth consecutive month in July. The Microsoft’s disappointing resultsAmazon and Intel —which announced 15,000 job cuts on Thursday after failing to meet growth expectations— have also spooked investors.
Jeff Bezos’ net worth fell by $15.2 billion today, leading a broader decline that has wiped $134 billion off the fortunes of the world’s 500 richest people.
Amazon shares fell 8.8% amid a broader market sell-off, reducing Bezos’ net worth to $191.5 billion, according to the Bloomberg Billionaires Index. Friday’s plunge is his third-worst, second only to April 4, 2019, when the Amazon co-founder’s wealth fell $36 billion following his divorce settlement, and April 29, 2022, when Amazon shares plunged 14%.
The Nasdaq has fallen 10% from its record close of 18,647.45 on July 10. An index or stock is considered to be in a correction when it closes 10% or more below its previous record. “We’re looking at an old-fashioned correction,” Tom Plumb, portfolio manager at Plumb Funds, told Reuters. “We’ve passed the economic torch from the perception of growth to the perception that government intervention with lower interest rates is needed to stabilize the economy.” July jobs report pushes Federal Reserve to undertake the first cut at its September meetingTraders are already forecasting that the central bank will cut rates by more than a percentage point by December.
Over the past 44 years, the index has entered correction territory after reaching a new high on 24 occasions, or about once every two years, according to a Reuters analysis by LSEG. In two-thirds of these cases, the index was trading higher a month after entering correction territory, according to the same data analyzed. The last time the index marked a correction after reaching a new high was on January 19, 2022. The index extended its losses to fall 36% from its peak before bottoming out in December of that year.
The S&P 500 index also had its worst day since October 2022. Like the Nasdaq, the sell-off in stocks intensified and bond yields plunged as the jobs report fueled concerns that the Federal Reserve’s decision to keep rates at their highest level in two decades could lead to a further economic slowdown. Treasury bonds continued to rise for a seventh straight day.
The stock market’s slide follows a torrid rally fueled in part by bets that a “soft landing” — meaning one that doesn’t lead to a recession-inducing slowdown — would continue to boost U.S. businesses. While the Federal Reserve has managed to tamp down inflation, the latest jobs figures may give policymakers reason to believe their policies are cooling the labor market too much.
Wall Street giants such as Citigroup and JPMorgan Chase are now calling for more aggressive action from the Federal Reserve. Speaking to Bloomberg Television, Chicago Fed President Austan Goolsbee said policymakers will not overreact to any data, echoing comments by Jerome Powell on Wednesday.
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