Stock Market Plunges as Unemployment Rate Rises

Key Takeaways

• The S&P 500 experienced a significant drop on Friday, Aug. 2, 2024, due to concerns about a potential economic slowdown and an unexpected increase in the unemployment rate.
• Intel shares plummeted after the chipmaker reported a larger-than-expected quarterly loss and announced layoffs as a cost-cutting measure.
• Clorox shares saw an increase after the company exceeded profit forecasts, thanks to a streamlined operating model that led to gross margin expansion.

The major U.S. equities indexes took a nosedive on Friday following the release of the latest U.S. labor market report. The report revealed lower-than-expected job additions in July and a surge in the unemployment rate, reaching its highest level since October 2021.

The S&P 500 experienced a 1.8% decline in the final trading session of the week. The Nasdaq saw an even steeper drop of 2.4%, while the Dow closed 1.5% lower.

Intel Faces Major Losses

Intel, a prominent chipmaker, suffered the most significant blow among S&P 500 constituents. The company’s shares plummeted by 26.1% after reporting a quarterly loss that exceeded expectations. Additionally, Intel announced layoffs as a means of cutting costs. The chipmaker attributed its poor results to gross margin headwinds caused by the development of its artificial intelligence (AI) computer product.

The semiconductor industry as a whole experienced a downturn, not just limited to Intel. Microchip Technology, another chipmaker, saw its shares drop by 10.6% after issuing a lackluster sales and profit forecast for the current quarter. The company cited macroeconomic headwinds, particularly weakness in U.S. and European industrial and automotive markets, as the reason for the unfavorable outlook.

Prudential Financial Struggles

Prudential Financial, an insurance company, witnessed a 10% decline in its shares following mixed second-quarter financial results. While total revenue slightly exceeded consensus forecasts, the insurer’s adjusted operating income fell short of estimates. The decline in the firm’s international operating income, attributed to lower net investment spreads and depressed underwriting results, negatively impacted its performance in the quarter.

Clorox Sees Strong Gains

Clorox, a provider of consumer and professional cleaning products, experienced the most significant gains in the S&P 500. The company’s shares jumped by 7.4% after posting quarterly profits that surpassed expectations. Clorox achieved gross margin expansion and drove earnings growth through the implementation of a streamlined operating model focused on cost reductions. The company also announced an agreement to sell its Better Health Vitamins business and highlighted its progress in recovering from a cyberattack that occurred the previous year.

GoDaddy and MarketAxess Holdings Show Promise

GoDaddy, an internet domain provider, saw its shares rise by 7% after increasing its full-year revenue guidance. The company highlighted the success of GoDaddy Airo, an AI-powered tool included with new domain purchases. This tool assists customers with various functions, including the creation of social media ads and email marketing campaigns.

MarketAxess Holdings, which operates an electronic trading platform for fixed-income securities, experienced a 6.1% increase in its shares ahead of the company’s second-quarter earnings report. In its most recent report, the firm exceeded profit expectations, driven by record commission revenue from emerging markets, Eurobonds, and municipal bonds.

Despite the overall market plunge, some companies managed to weather the storm and even thrive. Investors will continue to monitor economic indicators and company performances to make informed decisions in the ever-changing stock market.

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