The US stock market made other markets shiver

04/09/2020

Nasdaq plummeted 5% and S&P 500 had a 3.5% drop. After a long bull run, these numbers marked the heaviest loss since June 2020. Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), Facebook (NASDAQ: FB), and Alphabet (NASDAQ: GOOGL); finished Thursday with big losses.

“It’s too soon to say whether this is a pause that refreshes or whether this is the beginning of a more meaningful downturn in big tech,” said Nancy Prial, co-chief executive at Essex Investment Management. “Most of these are great companies with really robust growth opportunities, but the stocks are very richly valued.”

All eyes are on the U.S. nonfarm payroll results. There are expectations that 14 million jobs created in August will shape the future of markets. It is still possible that unemployment could be 11.5 million below the pre-pandemic era slowing down growth, which in turn will put more pressure on the White House to add another fiscal package.

Here are Bloomberg’s expectations:

  •       Change in non-farm payrolls: it is expected to be at +1.350 million, vs +1.763 million in July
  •       Unemployment rate: it is expected to be at 9.8%, vs 10.2% in July
  •       Average hourly earnings, month over month: it is expected to be at 0.0%, +0.2% in July
  •       Average hourly earnings, year over year: it is expected to be at 4.4%, 4.8% in July
  •       Labor force participation rate: it is expected to be at 61.8%, vs 61.4% in July.

 

As for other markets, European stock markets followed the same pattern as Wall Street and were opened mostly low. The Asian stock market too had the worst day in the last two weeks. Evidently, the market participants are watching the U.S. job reports absolutely closely to have a further idea of whether the fall is temporary, or they are in for a sharp, downward ride.

Energy also joined the selloff. Oil futures dropped 1% on Friday 04.09.2020 which was the biggest drop since June. There is still no hope for oil stocks anytime soon as cases of coronavirus and renewed lockdowns are still rising.