Stock Market Downturn and Economic Indicators Analysis

The U.S. stock market experienced a significant drop due to concerns of an economic downturn, influenced by negative economic indicators and geopolitical tensions.

### Stock Market News on August 1st
The stock market dropped significantly, possibly due to the upcoming presidential election increasing volatility. Federal Reserve's mention of a rate cut had a positive impact, but economic indicators like surging unemployment claims and a cooling manufacturing sector caused investor anxiety. The market downturn was also influenced by geopolitical tensions in the Middle East and a surge in jobless claims, possibly indicating a potential economic slowdown.

### The Impact of the Second-Quarter Non-Agricultural Labor Productivity on the Economy
The second-quarter non-agricultural labor productivity has increased by 2.3% year-on-year, showing a significant improvement from the first quarter. This increase in productivity has helped suppress unit labor costs, which only rose by 0.9% in the second quarter. The release of these productivity and labor cost indicators is expected to lead to a September interest rate cut by the Fed, as it provides evidence of a weakening labor market and reduced wage pressure, ultimately influencing the stock and bond markets.

### Economic Downturn Signals Concern
The employment index has experienced a significant drop, indicating the weakest level since June 2020, raising worries about a potential recession. The manufacturing sector is also showing a decline, with various metrics falling to levels not seen since the early days of the pandemic, leading to concerns about economic growth and investment. The release of the ISM PMI has caused a steep decline in bond yields, signaling a fear of an economic slowdown and making a significant impact on the market.

### Market Speculation and Stock Reactions
Investor betting on a 25 basis point rate cut for September decreased, while betting on a 50 basis point cut increased significantly. The S&P 500 index experienced a significant decline, with the Dow Jones and Russell 2000 also closing trading down amid fears of an economic recession. Semiconductor stocks, including Nvidia, Broadcom, AMD, Qualcomm, and Micron, took a hard hit, with various factors contributing to their decline.

### Meta's Strong Performance and the Concerns of the Labor Market
Meta's stock receives high target prices from Evercore and Goldman Sachs due to impressive second-quarter growth in advertising revenue and margin expansion. There are concerns about the slowing labor market and the potential impact of a weak employment report on the economy. Various financial institutions have conflicting predictions about the July non-farm payroll numbers, with some expressing worries about the potential effects of immigration and recent natural disasters.

### Mixed Performance in Tech Earnings Reports
Amazon's earnings per share fell short of expectations, but the revenue exceeded projections, mainly due to budget cuts. Micron's iPhone sales were good, but they fell slightly short in China, leading to a 1% decrease compared to the previous year. The overall tech sector is expected to experience a 20 to 25% growth in profits, with a focus on AI investments and a predicted increase in the S&P 500 index.

### Uncertainty in the Stock Market
The stock market is currently facing uncertainty about the possibility of an economic downturn, with fears of significant drops in the S&P 500 index. The instability is being driven by geopolitical risks, including the situation in the Middle East and the potential impact on oil prices. Additionally, there is nervousness about the recent unemployment rate and its potential effects on the market, leading to caution and a lack of confidence in the market's direction.

### Financial Market Highlights
Goldman Sachs predicts a 2.5% growth for the third quarter, while there are concerns about the economy and interest rate cuts impacting long-term bond yields. Amazon's performance is mixed, with slowing revenue growth in retail and e-commerce, but maintained growth in Amazon Web Services. The reaction to Mayor Park's remarks and the potential impact of a downturn on the economy are subjects of current consideration in the financial market.

### US Stock Market Update: Economic Indicators Signal Downturn
* 📉 On August 1st, the US stock market experienced a significant drop, erasing gains from the previous day, with the **S&P 500 falling by 2.3%** and the **Dow Jones by 1.21%**.
* 💼 Economic indicators released on the same day painted a bleak picture, with initial jobless claims reaching **249,000, the highest since August 2021**, and the ISM Manufacturing PMI dropping to **46.8, the lowest level since the early days of the pandemic**.
* 🔗 The weak economic data triggered fears of an economic slowdown, leading to a sharp decline in bond yields, with the 10-year yield dropping to **3.97%**, the first time in six months to hit the **3% level**.
* 🏭 Manufacturing and construction sectors also showed signs of weakness, with the S&P Global Manufacturing PMI falling into **contraction territory** for the first time this year, and construction spending declining for **two consecutive months**.
* 💰 Despite the economic concerns, second-quarter earnings reports have generally been positive, with S&P 500 companies exceeding revenue estimates by **1%** and profit estimates by **4.4%**.
* 🏛 The Federal Reserve's next move is closely watched, with market expectations shifting towards a **50 basis point rate cut in September**, up from 25 basis points, as concerns about an economic downturn grow.
* 📊 Tomorrow's July employment report is highly anticipated, with Wall Street consensus expecting **non-farm payrolls to increase by around 170,000** and the **unemployment rate to remain at 4.1%**.
* 🌐 Geopolitical tensions, including the recent conflict in Israel and ongoing US-China relations, are also contributing to market uncertainty, with some investors questioning the **current bullish market trend**.

[김현석의 월스트리트나우] 침체 공포→3% 금리…파월 이미 실수했다? "50bp 내릴 것" ↑

한경 특파원들이 전하는 잠들지 않는 투자 뉴스