The Intensifying Global Stock Decline After Weak U.S. Jobs Report: The global markets witnessed a wave of volatility and sharp declines after the release of the U.S. jobs report,
which was weaker than expected. This report raised concerns that the Federal Reserve might be too slow in reducing interest rates, causing panic and mass stock selling.
Contents
Calls for Quick Action to Ease Monetary Policy
Impact of the Report on U.S. Stocks
Movements in Technology Stocks
Markets Preparing for Fed Moves
Calls for Quick Action to Ease Monetary Policy
Many voices called for swift action to ease monetary policy amid speculations of a 50 basis point rate cut at the upcoming Federal Reserve meeting.
The yield on the two-year Treasury bond fell to its lowest level in 14 months,
while Japan’s Topix index had its worst session since 2016.
Decline in Technology Stocks
Amazon’s stock dropped by 8% due to concerns about weak demand for artificial intelligence,
while Intel’s losses exceeded 22%.
The global stock sell-off deepened with significant declines in bond yields,
reflecting investors’ fears that the Federal Reserve was too slow to cut interest rates.
Impact of the Report on U.S. Stocks
U.S. stocks fell in early trading hours after data showed a more-than-expected slowdown in U.S. employment in July.
The unemployment rate rose to its highest level in nearly three years, raising concerns that the labor market is slowing faster than other data suggests.
Major Tech Stocks Decline
The decline in significant tech stocks worsened as S&P 500 futures fell by 1.7%,
and Japan’s Topix index had its worst day since 2016.
The yield on the two-year Treasury bond fell to its lowest level in 14 months, increasing investors’ fears.
Speculations on Rate Cuts
Daniela Hathorn, a senior market analyst at Capital.com, said, “The data has started to show worrying signs,
which brings the consequences back to the Federal Reserve.” She added that investors fear the Fed might have waited too long to take action.
Movements in Technology Stocks
Amazon.com’s stock fell by 8.7% in pre-market trading due to concerns about rising costs to meet the demand for AI services.
Intel’s stock dropped by more than 22% after providing bleak growth forecasts and planned to lay off 15,000 employees.
Snap Inc.’s stock fell by 17% as revenue came in below estimates.
Expectations of Rate Cuts
Gary Dugan, CEO of Global CIO Office, said, “In the coming days,
there might even be a discussion about whether the Fed will need to cut rates by 50 basis points
at the next meeting to keep up with the economy’s loss of momentum.”
Increasing Global Tensions
Other factors that impacted the markets include rising tensions in the Middle East
after the assassination of the political bureau chief of Hamas in Tehran,
investors’ concerns about the slow Chinese economy and the fading previous hype about AI.
Markets Preparing for Fed Moves
Markets now anticipate that the Federal Reserve will make three consecutive quarter-point rate cuts in September,
November and December.
These developments have pushed the volatility index (VIX) to its highest closing level in nine months.
Investor Advice
Mark Haefele, Chief Investment Officer at UBS Global Wealth Management,
advised investors to prepare for renewed volatility but to avoid overreacting to short-term changes in market sentiment.
The Intensifying Global Stock Decline After Weak U.S. Jobs Report
