Is this a massive “sell the news” scenario? #Semiconductors struggled through their worst week since the pandemic, with the #StockMarket stagnant beneath its summer peaks. Below are essential patterns and occurrences to observe. $AVGO $NVDA $AAPLhttps://t.co/PoUKKtI1VC
— TradeStation (@TradeStation) September 9, 2024
The stock market faced considerable drops this week, influenced by a disappointing jobs report for August and a retreat in notable tech stocks. The S&P 500 decreased by 1.73% on Friday, concluding at 5,408.42. Meanwhile, the Nasdaq fell 2.55%, wrapping up at 16,690.83. The Dow Jones Industrial Average also saw a downturn, losing 410.34 points or 1.01%, to finish at 40,345.41.
Little change recently in the positions of large speculators/hedge funds in S&P 500 futures … still overall net short (although less than in 2023) pic.twitter.com/vEqEyfgDyu
— Liz Ann Sonders (@LizAnnSonders) September 9, 2024
“This market shift is largely sentiment-driven and rooted in growth anxieties,” commented Emily Roland, co-chief investment strategist at John Hancock Investment Management. “Traders are caught between interpreting negative news as genuinely harmful or as a catalyst for more aggressive Federal Reserve measures than anticipated.”
Big tech companies experienced substantial drops as investors sold off riskier assets. Shares of firms such as Apple saw a 3.7% decline, and Nvidia fell by 4%.
Stocks To Monitor | 📊Get ready to trade! Keep these stocks in focus as they create buzz in the market #StockMarket pic.twitter.com/NnWV1ThIKz
— ET NOW (@ETNOWlive) September 11, 2024
In the semiconductor sector, AMD and Intel also saw declines, each dropping roughly 4%. The overall slide in the market was fueled by worries regarding the U.S. economy’s stability. Friday’s performances concluded a tumultuous week for the stock markets.
The S&P 500 recorded a 4.3% dip, marking its most challenging week since March 2023, whereas the Nasdaq plunged 5.8%, its worst performance since the previous year. The Dow fell by 2.9% over the week. The new data from August’s jobs report heightened concerns about a slowing labor market.
Nonfarm payrolls expanded less than anticipated, while the unemployment rate fell to 4.2%, aligning with projections. “The market is searching for guidance, likely to come from the Federal Reserve,” remarked Charles Ashley, portfolio manager at Catalyst Capital Advisors. Many investors predict the Fed will lower rates by at least a quarter-point during its upcoming policy meeting.
Nonetheless, the signs of a weakening labor market have led to rising speculation that the central bank may pursue a more significant reduction. Traders appear divided on whether the Fed will reduce rates by a quarter-point versus a half-point.
Tech stocks pull down markets
The anticipated artificial intelligence tools and incorporation into the new iPhones might accelerate AI application development, according to TD Cowen. Analyst Krish Sankar highlighted that although on-device generative AI first gained traction on Android and PCs earlier this year, Apple’s software ecosystem could hasten the growth of these applications beyond the competition. Sankar noted that generative AI applications have the potential to greatly enhance user productivity.
U.S. crude oil prices plummeted to their lowest point since June 2023, marking their poorest week in almost a year. Crude oil prices dipped to $67.17 during the session, down 8% for the week, while the Brent global benchmark saw a 9.8% decline. This market downturn is ascribed to OPEC+ postponing plans to boost production by 180,000 barrels per day until December.
This postponement aligns with waning oil demand in China, the largest crude importer globally. Charles Schwab extended an apology following service disruptions caused by technical difficulties on August 5. The brokerage firm emphasized that it has conducted thorough reviews and stress tests to avert future incidents.
“Our foremost priority is ensuring that all clients have a consistent and dependable experience,” a spokesperson stated. Jeffrey Kleintop, global investment strategist at Charles Schwab, suggested that investors explore international equities for better portfolio diversification. Kleintop pointed out the superior performance of non-U.S. stocks, especially in European, Canadian, and U.K. markets.
These stocks are perceived as minimally affected by the soaring AI and tech stocks that ruled earlier this year and are now being cycled out. Goldman Sachs chief economist Jan Hatzius foresees that the Federal Reserve is poised to decrease interest rates by 25 basis points in its forthcoming September meeting. Hatzius anticipates three consecutive rate reductions of 25 basis points each by year-end.
While acknowledging the case for a 50-basis-point cut, he predicts that smaller reductions are more likely. The financial markets continue to experience notable volatility, influenced by economic data and expectations surrounding Federal Reserve actions. Investors are attentively observing developments to adjust their approaches accordingly.
