The U.S. stock market’s main indexes slumped on Thursday, weighed by mega-cap tech and chip stocks, while small-caps bore the brunt of selling pressure on renewed fears of a slowdown in the U.S. economy.
Ankika Biswas and Shubham Batra for Reuters:
Fresh data showed a measure of manufacturing activity dropped to an eight-month low in July, keeping the sector in a contraction and dragging Industrials stocks down 2%. Caterpillar and Boeing were the biggest weights on the blue-chip Dow.
“The overall market is being influenced by the weak ISM manufacturing report, which tells the market that the economy might actually be in a worse shape than they had expected,” said Robert Pavlik, senior portfolio manager at Dakota Wealth. “And (Federal Reserve Chair) Powell’s still on hold with rate cuts, so that’s gotten them concerned.”
Most megacap stocks fell, with Apple and Amazon.com down over 1% each ahead of their quarterly results after markets close, while Tesla slumped 4%.
Nvidia dropped 3.2% in a broader chip stocks rout sparked by Arm Holdings’ conservative revenue forecast and Qualcomm flagging a revenue hit from the impact of trade curbs, knocking their stocks down 15% and 8%, respectively…
Earlier in the day, data showed jobless claims rose to an 11-month high, another sign of labor market weakness ahead of Friday’s Non-farm Payrolls reading.
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MacDailyNews Take: Again, the Fed stopped raising rates too soon.
As we wrote in February 2023, “When certain quarters, including the Fed, delude themselves and others that ‘inflation is transitory’ and waste at least a year before doing a mere portion of what is necessary* (interest rate hikes), the price will be paid for being delusional and late.”
‘Tis best to get a handle on inflation, if you know how, while you still can. – MacDailyNews, May 11, 2021
Stop the misguided crusade against domestic energy production and profligate federal spending and inflation will be stopped dead in its tracks. It’s not difficult. – MacDailyNews, May 11, 2022
For new generations, sometimes tough lessons have to be retaught and learned the hard way. As we go through this, remember: It’s always darkest before the dawn. – MacDailyNews, July 14, 2022
Inflation is repudiation. — Calvin Coolidge
When a business or an individual spends more than it makes, it goes bankrupt. When government does it, it sends you the bill… [which] comes in two ways: higher taxes and inflation. Make no mistake about it, inflation is a tax and not by accident. — Ronald Reagan
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