Search Mark
Home / Expert Opinion

U.S. Stocks Fall On Disappointing Payroll Report; Tech Shares Tumble 


U.S. stocks fell, giving up earlier gains, after the payroll report showed lower-than-expected job growth and average hourly earnings rose. 

Tech shares also tumbled, with Apple losing its 3 trillion dollar market cap status. The stock closed down nearly 5%. 

According to a report from the Bureau of Labor Statistics on Friday, the U.S. economy added 187,000 jobs last month, bringing the unemployment rate down to 3.5% from 3.6% in June. The report also showed that average hourly earnings rose 0.4% in July, marking a 4.4% increase over the past 12 months. 

Bond yield also fell, with the 10-year just managing to say above 4% falling 13 basis points. 

Swap traders are projecting a 40% chance of another quarter-point rate increase by the end of this year, with the contracts pricing in about 10 basis points of tightening. By the end of 2024, they project rate cuts totalling more than 125 basis points. 

For the week, the Dow dropped 1.1%, the S&P 500 slipped 2.3% and the Nasdaq tumbled 2.8%. 

Here are the closing levels for Friday, 4th August 2023: 

 Last Change %Change 
Dow Jones 35,065.62 –150.27. –0.43% 
S&P 5004,478.03 –23.86. –0.53% 
Nasdaq Comp13,909.24    –50.47. –0.36% 
U.S. 10Y4.03%   
VIX 17.1 +1.18 +7.41% 

The Price action on Friday may seem a little confusing. 

The Jobs report provided both positive and negative cues for the bulls and the bears.  

Recently, the bulls have not needed a specific excuse to take the market higher. Nevertheless, they took the initiative and sent the market higher with help from falling bond yields.  

It initially appeared that we would erase the losses of the previous 3 days. However, something changed, and the market started to sell off and cancelling out the post jobs report rally.  

There was talk about program or computer driven selling from managed funds. These programs tend to pick up steam if there is downward momentum. The reason it triggered a sell-off is not entirely clear. Nevertheless, it does leave the technical picture slightly bearish, and any further selling could signal a pause in the bull market or worse, the start of a reversal. 

For a reversal to happen, it will take a significant shift, especially with buyers on dips and bulls showing no sign of giving up. 

Keep an eye on the VIX; it has started to move higher, indicating that fear is creeping back into the market. 

Source: CBOE, Bloomberg 

This commentary is written by James Gomes, a seasoned finance industry veteran with extensive experience of over 30 years, including a substantial tenure at a reputable U.S. bank exceeding 20 years.

Risk Disclosure
Trading in financial instruments involves high risks due to the fluctuation in the value and prices of the underlying financial instruments. Due to the adverse and unpredictable market movements, large losses exceeding the investor’s initial investment could incur within a short period of time. The past performance of a financial instrument is not an indication of its future performance. Investments in certain services should be made on margin or leverage, where relatively small movements in trading prices may have a disproportionately large impact on the client’s investment and the client should therefore be prepared to suffer significant losses when using such trading facilities.

Please ensure you read and fully understand the trading risks of the respective financial instrument before engaging in any transaction with Doo Prime’s trading platforms. You should seek independent professional advice if you do not understand any of the risks disclosed by us herein or any risk associated with the trade and investment of financial instruments. Please refer to Doo Prime’s Client Agreement and Risk Disclosure Statement to learn more.

[Disclaimer]
This information is addressed to the general public solely for information purposes and should not be taken as investment advice, recommendation, offer, or solicitation to buy or sell any financial instrument. The information displayed herein has been prepared without any reference or consideration to any particular recipient’s investment objectives or financial situation. Any references to the past performance of a financial instrument, index, or a packaged investment product shall not be taken as a reliable indicator of its future performance. Doo Prime and its holding company, affiliates, subsidiaries, associated companies, partners, and their respective employees, as well as managers, make no representation or warranties to the information displayed and Doo Prime and its holding company, affiliates, subsidiaries, associated companies, partners and their respective employees, as well as managers, shall not be liable for any direct, indirect, special or consequential loss or damages incurred a result of any inaccuracies or incompleteness of the information provided. Doo Prime and its holding company, affiliates, subsidiaries, associated companies, partners, and their respective employees, as well as managers, shall not be liable for any direct, indirect, special, or consequential loss or damages incurred as a result of any direct or indirect trading risks, profit, or loss arising from any individual’s or client’s investment.

 

Share to

Expert Opinion

Market Rally with Lower Inflation and Fed Rate Cut Bets

The market rally with S&P 500 and Dow Jones rising as investor confidence grew on Fed rate cut speculation and lower-than-expected inflation data

2024-7-15 | Expert Opinion

US Stocks Soar on Strong Jobs Data and Tech Rally 

The US stock market kicked off the second half of 2024 on a high note, fuelled by jobs data and continued strength in the tech sector.

2024-7-9 | Expert Opinion

Stocks Mixed as Inflation Data and Debate Drive Market Volatility

US market closed mixed, with the S&P 500 dipping 0.4% and the Dow edging down 0.1% amid inflation concerns and political uncertainty.

2024-7-1 | Expert Opinion