A giant “sell the news moment?” #Semiconductors had their worst week since the pandemic as the #StockMarket gets stuck below its summer highs. Here are some key patterns and events to watch. $AVGO $NVDA $AAPLhttps://t.co/PoUKKtI1VC
— TradeStation (@TradeStation) September 9, 2024
The stock market ended the week on a sour note as investors grappled with a disappointing jobs report and its implications for interest rate decisions. The Nasdaq Composite and S&P 500 experienced their worst weekly performance of the year, while the Dow Jones Industrial Average also closed in the red. The jobs report, which fell short of expectations and saw prior month figures revised lower, pointed to a cooling labor market.
However, the unemployment rate dipped back to 4.2%.
Energy sector the decisive laggard today and remains in last place both MTD and YTD; REITs at top of leaderboard today but still way behind YTD … small caps struggled relative to large caps with Russell 2000 essentially flat vs. S&P 500’s 0.4% gain pic.twitter.com/RXpGtSotAU
— Liz Ann Sonders (@LizAnnSonders) September 10, 2024
These mixed signals have fueled speculation about a significant interest rate cut by the Federal Reserve in its upcoming meeting. Market analysts now see a 50-50 chance of a 50 basis point rate cut, a notable shift from expectations set just a day earlier.
Fed Governor Chris Waller also hinted at the possibility of consecutive cuts if supported by data.
Cons Discr and Industrials were top performers today, but strength was mostly widespread except for Comm Serv … small caps lagged behind large caps as Russell 2000 Value fell (index is struggling most YTD with a 1.9% gain) pic.twitter.com/zEhnw1TyTG
— Liz Ann Sonders (@LizAnnSonders) September 9, 2024
The tech sector took a particularly hard hit, with chipmaker Broadcom’s shares falling more than 10% and dragging down other chip stocks like Nvidia. Despite benefiting from increased AI spending, Broadcom’s other divisions underperformed, adding pressure to the sector.
#MarketAlert | Paint stocks in Focus: Kansai Nerolac up over 1.5%#StockMarket pic.twitter.com/1fHhmUC7CM
— ET NOW (@ETNOWlive) September 11, 2024
Market grapples with jobs report
Analysts have cut their earnings expectations for the current quarter by 2.8% during July and August, a stark contrast to the previous quarter where estimates were raised. Citi US equity strategist Scott Chronert noted that, outside the high-performing “Magnificent 7,” estimate revisions for 2024 and 2025 earnings per share have been stable but uninspiring.
Investors are now focusing on the upcoming consumer price updates, expected to show headline inflation at 2.6% and core prices rising by 3.2% over the previous year. These figures will be crucial in determining the scale of any upcoming interest rate cuts. Oil prices are also under pressure, experiencing their most significant drop in nearly a year due to concerns about slowing demand.
Crude oil prices fell about 2% to trade just below $68 a barrel, while Brent crude also dipped around 2%. Market volatility is expected to persist, according to Michael Darda, chief economist at Roth Capital Partners. He expressed skepticism over a “soft landing” for the economy and highlighted rising unemployment rates and high earnings expectations as potential triggers for increased market instability.
Prominent tech stocks like Nvidia, Broadcom, Taiwan Semiconductor, Advanced Micro Devices, and ASML faced significant declines, with Nvidia struggling amidst speculations about the sustainability of the AI boom. As investors navigate this volatile market, they will be closely watching economic indicators and corporate earnings to gauge the health of the economy and the potential impact on their portfolios.
