Wall Street closed lower on Friday as U.S. jobs growth slowed in July, leading to all three major indexes posting weekly losses. The disappointing news came a day after Apple reported disappointing earnings, causing its shares to drop by 4.8%, the biggest daily percentage decline since September 2022. This decline dented the S&P 500 by approximately 16 points. On the bright side, Amazon.com saw an 8.3% increase in its shares after issuing an upbeat third-quarter outlook, providing a partial counterweight to Apple for the S&P 500 and Nasdaq.
The trading session was volatile, with the indexes initially rising in the morning before wavering and turning negative. Greg Bassuk, CEO of AXS Investments, noted that although the economy and corporate earnings seemed to be on a positive trajectory, the potential impact of major companies like Apple on investor sentiment cannot be ignored.
Uncertainty about geopolitical concerns, such as the Ukraine war and China issues, also contributed to the decline. Bassuk suggested that investors were resetting and positioning themselves for potential downside surprises. The Labor Department’s report revealed that U.S. employers added 187,000 jobs in July, slightly lower than expected. Data for June also saw a downward revision in job additions from 209,000 to 185,000.
However, there were some positive highlights. Average hourly earnings rose 0.4% in July, surpassing expectations, and the year-on-year increase in wages reached 4.4%. Additionally, the yield on the 10-year benchmark Treasury note dipped after the jobs data, providing a boost to some mega-cap stocks.
Shares of other tech giants, Microsoft and Snowflake, also saw modest gains after Amazon’s cloud business segment exceeded sales estimates. Nevertheless, the Dow Jones Industrial Average fell 0.43%, the S&P 500 dropped 0.53%, and the Nasdaq Composite declined by 0.32%.
For the S&P and Nasdaq, these weekly declines were the largest since March, prompting some investors to take profits after five months of gains. The economic data, disappointing earnings, and rising Treasury yields contributed to this decision.
Out of the 422 companies in the S&P 500 that have reported quarterly earnings as of Friday, 79.1% have surpassed autonomous expectations, according to Refinitiv data.
Several companies also witnessed notable movements. Icahn Enterprises, owned by Carl Icahn, saw a 23.3% decline after halving its quarterly payout following accusations of operating a “Ponzi-like” structure. Cybersecurity firm Fortinet tumbled 25.1% after cutting its annual revenue forecast due to tight spending from enterprise clients. On the other hand, Tupperware shares rallied 35.5% after finalizing an agreement with lenders to restructure its debt obligations. Amgen experienced a 5.5% gain after reporting a higher quarterly profit due to strong sales of its drugs.
DraftKings’ shares rose by 5.8% after the sports-betting company raised its fiscal year 2023 revenue outlook.
In terms of market volume, there were 11.39 billion shares traded on U.S. exchanges, exceeding the 10.87 billion average for the last 20 trading days.
Advancing issues slightly outnumbered declining ones on the NYSE and Nasdaq, with a ratio of 1.22-to-1 and 1.14-to-1 respectively. The S&P 500 had 19 new 52-week highs and 11 new lows, while the Nasdaq Composite recorded 54 new highs and 91 new lows.
Overall, the market remained cautious as investors braced for more potential downside surprises amidst ongoing uncertainty in the geopolitical landscape and the impact of disappointing earnings reports.
Echo Wang, a correspondent at Reuters, contributed to this report.