[New York Stock Market] Plunges for Second Day Amid US Recession Concerns... Nasdaq Down 2.43%

[Image source=Yahoo Finance]

The New York stock market fell sharply for the second consecutive day amid concerns about a U.S. economic recession. The July unemployment rate came out higher than expected.

On the 2nd (local time) at the New York Stock Exchange, the Dow Jones Industrial Average closed at 39,737.26, down 610.71 points (1.51%) from the previous day. The Standard & Poor's (S&P) 500 index fell 100.12 points (1.84%) to 5,346.56, and the Nasdaq index plunged 417.98 points (2.43%) to close at 16,776.16.

Concerns about a recession triggered a sell-off for two consecutive days. While the previous day’s worries about economic contraction were driven by the U.S. manufacturing Purchasing Managers' Index (PMI) results, employment data unsettled investors this time.

According to the U.S. Department of Labor, the July unemployment rate was 4.3%, exceeding both the market expectation and the previous month’s rate of 4.1%. This is the highest level since October 2021. Nonfarm payroll employment increased by only 114,000 in July, falling far short of the market expectation of a 176,000 increase. The June figure was a 179,000 increase.

Concerns about a recession have also strengthened expectations that the U.S. Federal Reserve (Fed) will accelerate the pace of interest rate cuts. According to the Chicago Mercantile Exchange (CME) FedWatch tool, after the July employment report, the federal funds futures market raised the probability of a 50 basis point (1bp = 0.01 percentage point) rate cut by the Fed in September to 71.5%. The probability of a total 125 basis point rate cut by December also surged to 45.9%.

The yield on the 10-year Treasury note fell below 4% to 3.79%, significantly lower than the benchmark interest rate range of 5.25?5.50%.

Intel experienced its worst day in 50 years, plunging 26% following disappointing earnings and a large-scale layoff announcement. Its stock price also dropped to the lowest level in over a decade.

Amazon’s stock price fell nearly 9% after reporting earnings that missed expectations. This is the lowest closing price in five months since February 20.

On the other hand, Apple performed relatively well. Although iPhone sales slowed, the company’s earnings exceeded expectations, pushing the stock up 0.69%.

Bank of America fell 4.9%, Wells Fargo dropped 6.4%, and JPMorgan Chase also declined by more than 4%.