Dow Jones Down 600 Points As Rate Cuts Odds Surge On Hiring Slump

U.S. stock indices fell as weak jobs data spooked investors, despite earnings beats from Apple and Amazon.

Summary

  • Dow Jones fell more than 600 points on weak jobs data.
  • Apple stock fell despite strong earnings.
  • Fed may have to lower interest rates to boost hiring.

Weak jobs data hit stocks hard, despite improving odds of the Federal Reserve cutting interest rates. On Friday, April 1, the Dow Jones dropped 620 points, or 1.42%, while the S&P 500 lost 1.75%. At the same time, the tech-heavy Nasdaq declined as much as 2.33%. The main driver of the declines was July’s labor market report, which showed just 73,000 new jobs versus the expected 104,000.

Tech stocks were among the biggest losers, and even Apple fell 2.5% despite strong earnings. The tech giant reported its highest revenue growth since December 2021. The report indicated that U.S. consumers continued spending despite inflation concerns stemming from the trade war. Apple also stated it plans to significantly increase its investment in AI.

Dow Jones Industrial Average heatmap
Dow Jones Industrial Average heatmap | Source: TipRanks

Amazon’s earnings also exceeded expectations, with earnings per share of $1.68 compared to the $1.33 estimate. However, the company’s third-quarter guidance was relatively modest. This fell short of investor expectations, especially following the company’s multibillion-dollar investment in AI. As a result, its stock was among the biggest losers, falling 8%.

While tech stocks took a beating, there may be a silver lining. Specifically, the weak labor market could force the Federal Reserve to cut interest rates. CME FedWatch futures markets are now pricing in an 83% chance of a rate cut in September, up sharply from 38% just a day earlier—likely due to the disappointing employment data.

The Fed has a dual mandate to maintain low inflation and high employment. So far, the central bank has resisted pressure from President Donald Trump’s White House to lower rates, despite a split among FOMC members.

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