Stocks Sink as Tech Leads Drop in Run-Up to Jobs: Markets Wrap

(Bloomberg) — A selloff in stocks intensified on Friday as concerns deepened over the health of the US economy and the outlook for technology companies.

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Futures contracts for the Nasdaq 100 dropped 1.6% after disappointing results from Amazon.com Inc. and a weak sales report by Intel Corp. In Asia, Japan’s benchmark index sank by the most since 2016 as a stronger yen weighed on the outlook for country’s export-orientated economy. Europe’s Stoxx 600 index dropped 1.5%.

The broader risk-off tone came after US unemployment claims hit an almost one-year high while manufacturing shrank. The earnings from Amazon.com made investors question once again whether the returns from artificial intelligence is worth the cost, following similar underwhelming reports from Microsoft Corp. and Alphabet Inc.

Still, Apple Inc. predicted that its new artificial intelligence features will spur iPhone upgrades in coming months, helping the company reemerge from a sales slowdown that has hit its China business especially hard.

Meanwhile, Treasuries extended a rally, with the policy-sensitive two-year yields touching a 14-month low.

Investors will now turn their attention to July’s US employment report due Friday to assess the health of the labor market and further calibrate their outlook for the Fed’s rate path. The unemployment rate is seen holding at 4.1%, the highest since November 2021, following increases in each of the last three months.

“The ‘hard landing’ genie has one foot out of the bottle, soon to be two if tonight’s non-farm payrolls disappoints,” said Tony Sycamore, analyst at IG Australia.

In currencies, the yen extended its rally into the fourth day, pushing the currency to around 149 per dollar. The pound slid for a second day after the Bank of England cut rates and signaled further cautious reductions ahead. A Bloomberg dollar gauge was steady.

Key events this week:

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 fell 1.5% as of 8:49 a.m. London time

• S&P 500 futures fell 1%

• Nasdaq 100 futures fell 1.6%

• Futures on the Dow Jones Industrial Average fell 0.6%

• The MSCI Asia Pacific Index fell 3.5%

• The MSCI Emerging Markets Index fell 2.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0798

• The Japanese yen rose 0.2% to 149.01 per dollar

• The offshore yuan rose 0.5% to 7.2181 per dollar

• The British pound fell 0.2% to $1.2712

Cryptocurrencies

• Bitcoin fell 0.8% to $64,193.52

• Ether fell 0.7% to $3,147.54

Bonds

• The yield on 10-year Treasuries declined three basis points to 3.95%

• Germany’s 10-year yield declined three basis points to 2.21%

• Britain’s 10-year yield declined three basis points to 3.85%

Commodities

• Brent crude rose 1% to $80.29 a barrel

• Spot gold rose 0.6% to $2,461.86 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Chiranjivi Chakraborty.

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