On Wednesday, September 4, 2024, people walk past the New York Stock Exchange in New York City. (Photo by AP's Peter Morgan)
Wall Street continued to slide on Wednesday, following Tuesday’s significant drop, as technology and energy stocks weighed on the market. The S&P 500 dipped 0.2%, extending the previous day’s 2.1% fall. The Nasdaq composite also lost 0.3%, while the Dow Jones Industrial Average eked out a 0.1% gain, barely staying in positive territory.
The latest downturn was triggered by an unexpected drop in U.S. job openings, signalling potential cooling in the job market. A report from the Labour Department revealed that job openings in July fell to 7.7 million, down from June’s 7.9 million and marking the lowest level since January 2021. Despite this, hiring increased, reflecting a mixed picture of the labour market.
Investors and the Federal Reserve are closely monitoring employment data as a key indicator of the economy’s health. Wall Street expects the Fed to reduce interest rates in its upcoming September meeting. The central bank had previously raised rates to their highest level in two decades to combat inflation. Although inflation has eased, the economy remains resilient. A cooling job market might raise concerns about future economic growth, but it could also reduce inflationary pressures.
Economists Carl Weinberg and Rubeela Farooqi of High-Frequency Economics noted that despite the dip in job openings, there’s no sign of an imminent recession. They highlighted steady hiring and job quits, suggesting the labour market remains stable for now.
Tech stocks bore the brunt of the market's decline, dragging down broader indexes. Companies like Nvidia, with a market value of $2.65 trillion, dropped 1.7%. Apple saw a 0.9% decline, and Intel shares slid by 3.3%.
Energy stocks followed suit, contributing to the overall slump. Exxon Mobil fell by 1.2%, mirroring the drop in U.S. crude oil prices, which dipped below $70 a barrel. In addition, healthcare companies faced losses, with Eli Lilly down 1.1%, Elevance Health sliding 2.7%, and Centene plummeting by 8.7%.
Adding to market woes, U.S. Steel’s shares tumbled 17.5% after the Biden administration indicated it may block the company’s acquisition by Japan’s Nippon Steel.
Despite the overall downturn, the Dow managed a slight increase, gaining 38.04 points to close at 40,974.97. Meanwhile, the Nasdaq composite fell 52 points, closing at 17,084.30, and the S&P 500 slipped 8.86 points to finish at 5,520.07.
Several upcoming economic reports this week are expected to offer more clarity to investors and the Federal Reserve. On Thursday, the Institute for Supply Management will release its services sector index for August, a critical measure of the U.S. economy’s largest segment. Additionally, the U.S. government will release its monthly jobs report on Friday. Analysts expect the economy to have added 160,000 jobs in August, up from July’s 114,000, with a slight decrease in the unemployment rate to 4.2%.
Traders are also speculating that the Fed could reduce its benchmark interest rate by 1% by the end of 2024, potentially implementing a larger cut than the typical quarter-point reduction in the coming months.
In individual stocks, Dollar Tree took a hit, plunging 22.2% after the discount retailer slashed its full-year earnings forecast. Hormel Foods, the company behind Spam, also suffered, falling 6.4% after lowering its revenue projections for the year. Nordstrom slipped 0.2% as members of the Nordstrom family proposed a $3.76 billion buyout to take the department store chain private.
In the bond market, yields on the 10-year Treasury fell to 3.76%, down from 3.83% the day before. Meanwhile, the 2-year Treasury yield dropped to 3.76% from 3.87%. This marks the least inversion in yields between the two bonds in over two years. Yield inversions typically signal a looming recession, but this inversion has persisted amid ongoing economic growth.
European and Asian markets also experienced declines, mirroring Wall Street's losses.
