The major U.S. index futures are currently pointing to a sharply lower open on Monday, with stocks likely to extend the sell-off seen over the two previous sessions.
An overseas sell-off, which saw Japan’s Nikkei 225 Index record its biggest slump since “Black Monday” in October 1987, is likely to carry over on to Wall Street.
Concerns about the U.S. economy slipping into recession following last Friday’s disappointing jobs report triggered the significant weakness in the overseas markets.
Shares of AI darling and market leader Nvidia (NASDAQ:NVDA) are plunging by 13.9 percent in pre-market trading amid an unwinding of the artificial intelligence trade that recently helped the markets to record highs.
Tech giant Apple (NASDAQ:AAPL) is also tumbling by 9.9 percent in pre-market trading after Warren Buffett’s Berkshire Hathaway revealed it sold nearly half its stake in the iPhone maker.
Stocks moved sharply lower during trading on Friday, adding to the steep losses posted during Thursday’s session. With the extended sell-off, the tech-heavy Nasdaq dropped to its lowest closing level in two months and the S&P 500 hit a nearly two-month closing low.
The major averages ended the day off their lows of the session but still firmly negative. The Nasdaq dove 417.98 points or 2.4 percent to 16,776.16, the S&P 500 plunged 100.12 points or 1.8 percent to 5,346.56 and the Dow tumbled 610.71 points or 1.5 percent to 39,737.26.
Reflecting the sell-off, the major averages also moved sharply lower for the week. The Nasdaq plummeted by 3.4 percent ,while the S&P 500 and the Dow both slumped by 2.1 percent.
Concerns about the outlook for the U.S. economy continued to weigh on Wall Street following the release of a closely watched Labor Department report showing employment increased by much less than expected in the month of July.
The report said non-farm payroll employment climbed by 114,000 jobs in July after jumping by a downwardly revised 179,000 jobs in June.
Economists had expected employment to rise by 175,000 jobs compared to the surge of 206,000 jobs originally reported for the previous month.
The Labor Department also said the unemployment rate rose to 4.3 percent in July from 4.1 percent in June. Economists had expected the unemployment rate to remain unchanged.
With the unexpected increase, the unemployment rate reached its highest level since hitting 4.5 percent in October 2021.
While weaker than expected economic data has recently been a positive for the markets amid expectations it would convince the Federal Reserve to lower interest rates, traders now seem concerned the Fed has waited too long and could lead the U.S. into a recession.
“The economy and the stock market have been resilient because unemployment has stayed low and consumers have kept spending, but if that is no longer the case then the Fed has made a serious error in keeping rates too high for too long,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.
Negative sentiment was also generated in reaction to the latest earnings news, with shares of Intel (NASDAQ:INTC) plummeting by 26.1 percent after the semiconductor giant reported weaker than expected second quarter results.
Online retail giant Amazon (NASDAQ:AMZN) also plunged by 8.8 percent after reporting weaker than expected second quarter revenues and providing disappointing guidance for the current quarter.
On the other hand, shares of Apple (NASDAQ:AAPL) moved to the upside after the tech giant reported fiscal third quarter results that beat analyst estimates on both the top and bottom lines.
Semiconductor stocks saw substantial weakness following the disappointing Intel results, with the Philadelphia Semiconductor Index plunging by 5.2 percent to a three-month closing low.
Significant weakness was also visible among oil service stocks, as reflected by the 5.2 percent nosedive by the Philadelphia Oil Service Index.
With Amazon leading the way lower, retail stocks also saw considerable weakness, dragging the Dow Jones U.S. Retail Index down by 4.2 percent.
Computer hardware, airline and financial stocks also moved notably lower amid broad based selling pressure on Wall Street.