Nasdaq 100, Dow Jones, S&P 500: US Stocks Dip as Weak Labor Market Fuels Economic Downturn Concerns

Highlights

• US stock indexes weaken due to concerns of an economic downturn
• Weekly jobless claims exceed expectations, adding to concerns of slowing job growth
• Private payrolls’ expansion was lower than expected in March and job cuts have increased almost fivefold

Overview

The major U.S. stock indexes are weaker shortly after the opening on Thursday. The volume is light, however, ahead of the end of the holiday-shortened week. Fears of an economic downturn on the horizon are being fueled by signs of a potentially weakening labor market, causing stocks to dip on Thursday.

At 13:53 GMT, the blue chip Dow Jones Industrial Average is trading 33357.46, down 125.26 or -0.37%. The benchmark S&P 500 Index is at 4072.20, down 18.18 or -0.44% and the tech-weighted NASDAQ Composite is trading 11910.53, down 86.33 or -0.72%.

Jobless Claims Exceed Expectations, Adding to Concerns of Slowing Economic Growth

The latest weekly jobless claims exceeded expectations, adding to recent signals of slowing job growth. Initial claims came in at 228K versus an estimate of 200K. However, it did represent an 18K decrease from the previous week.

Private payrolls’ expansion was also lower than expected in March, and the number of available positions fell below 10 million in February for the first time in nearly two years. Additionally, job cuts have increased almost fivefold compared to last year.

Previously, investors were optimistic about the economy cooling, hoping it would cause the Fed to change its course on interest rate hikes. However, they are now concerned that the central bank has tightened the economy to the point of a recession.

Investors will closely monitor the March jobs report on Friday, expecting a reversal of the trend in solid growth despite layoffs in the tech and financial sectors.

Goldman Sachs Predicts Significant YoY Decline in S&P 500 Earnings

The first-quarter earnings season kicks off next week with big banks including JPMorgan and Citigroup reporting. Consensus expectations are for S&P 500′s earnings per share to fall by 7% year over year, the largest decline since the third quarter of 2020, according to Goldman Sachs. It will also mark a “significant deterioration” from the 1% decline in the prior quarter, the bank said.

Tech and Growth Stocks Drop, Defensive Stocks Rise in Early Trading

In early trading, major technology and growth stocks, including Apple Inc, Tesla Inc, and Nvidia Corp, experienced losses ranging from 0.9% to 2.1%. At the same time, bond yields inched higher. The information technology sector experienced the largest sectoral loss on the S&P 500 as investors preferred defensive stocks, such as healthcare and utilities.

Among significant stock movements, AMC Entertainment Holdings Inc rose 8.6% after a U.S. court denied the theater operator’s request to lift a status quo order necessary for its stock conversion plan. In contrast, Levi Strauss & Co saw a decline of 12.7% after the apparel maker posted a decrease in quarterly profit.