Dow loses more than 800 points as recession fears dent Wall Street sentiment: Live updates

Stocks fell sharply on Friday with the S&P 500 headed for its worst session in roughly two years, as a much weaker-than-anticipated jobs report for July ignited worries that the economy could be falling into a recession.

The broad-market index dropped 2.4%, while the Nasdaq Composite lost 2.9%. The Dow Jones Industrial Average fell 863 points, or 2.1%.

Friday’s sell-off pushed the Nasdaq into correction territory — down more than 10% from an all-time high set nearly a month ago. The Nasdaq-100, which is made up of the 100 largest names in the Composite, was deeper in a correction, trading 11% below its 52-week high. The S&P 500 and Dow were 6% and 4% below their all-time highs, respectively.

Stocks sank after July job growth in the U.S. slowed more than expected, while the employment rate rose to the highest since October 2021. Nonfarm payrolls grew by just 114,000 last month, the Labor Department reported, a slowing from 179,000 jobs added in June and below the 185,000 expected by economists polled by Dow Jones. The unemployment rate increased to 4.3%.

Some megacap names saw steep losses during the day, as Amazon‘s second-quarter results sparked investor concerns about Big Tech’s blowout levels of artificial intelligence-related capital spending. The e-commerce giant slid 12.5% after missing the Street’s revenue estimates and issuing a disappointing forecast. Those losses dragged on the consumer discretionary sector, which is headed for its worst day since May 18, 2022, when it fell 6.6%.

Intel, meanwhile, cratered roughly 27% after announcing weak guidance and layoffs. Nvidia lost more than 4%, following a 6% loss a day before.

The 10-year Treasury yield fell to its lowest since December as investors flooded into bonds for safety. The benchmark rate was last at 3.82%.

Friday’s declines are a “natural course” in a bull market that is reverting after its steep uptrend, LPL Financial chief technical strategist Adam Turnquist said.

“[The Nasdaq] was very overbought coming into July, same thing with semiconductors. And a lot of that AI enthusiasm hasn’t really had a reality check at this stage,” Turnquist said, adding that “it’s not the end of the AI story.”

It has been a volatile week, with the previous session’s heavy sell-off sending ripples around global stock markets. The stock market had rallied Wednesday when the Federal Reserve gave a strong hint that a rate cut was coming at its next meeting in September, while keeping rates at current levels. But after Friday’s weak job figures, many investors are starting to believe maybe the central bank should have acted on Wednesday.

“The markets only get spooked by an unexpected Fed move when they believe the Fed sees or is sniffing out something that the markets haven’t caught on to,” BMO Wealth Management Chief Investment Officer Yung-Yu Ma said. “In this case, it’s the markets that have caught on to something that the Fed is missing.”