Wall Street Set To Tumble As Macro Concerns Return, VIX Spikes And Global Markets Sell Off: Safe-Haven Gold Rises To Record High As Traders Eye July Jobs Data

U.S. stocks were priming for more losses on Friday as traders await the key non-farm payrolls report. Tech stocks could again take the brunt of the selling amid some sector-specific concerns and the ongoing rotation out of the sector. Against the backdrop, the payroll data could be a make-or-break catalyst for the market.

Quincy Krosby, Chief Global Strategist at LPL Financial, said if the payroll report sees the unemployment rate rising despite an increase in the participation rate, the Fed is going to have a lot of explaining to do as officials hit the airwaves with their opinions.

The CBOE volatility index, aka VIX, spiked about 10% and breached the 20 mark for the first time since Oct. 2023.

Cues From Last Session:

The major averages pulled back sharply on Thursday, as traders reacted to the Institute for Supply Management’s weak manufacturing purchasing managers’ index and a spike in weekly jobless claims. The ISM manufacturing PMI for July fell to the weakest since November 2023, signaling a steeper contraction than in July. The 10-year bond yield dipped below the 4% threshold following the data.

After opening slightly higher, thanks to a positive reaction to Meta Platform, Inc.’s (NASDAQ:META) earnings, the indices reversed course after the ISM data and fell steadily until the mid-session. They went about a consolidation move around the depressed levels in the afternoon before closing notably lower.

IT, energy and consumer discretionary stocks were among the biggest decliners, while defensive sectors such as utility, real estate, healthcare and consumer staple stocks gained some ground. Communication services stocks received support from Meta’s earnings.

Insights From Analysts:

Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance, sees the risk of hard-landing in the wake of the recent weak economic data. “As we get closer to the election, the market has become more volatile, and investors are still worried about growth slowing too quickly and inflation remaining sticky,” he said. 

“The Fed has been able to orchestrate a soft landing – so far – but that could be in jeopardy if growth slows too quickly, or inflation remains stubbornly high.”

Krosby said weak data and the pullback in bond yields suggest a “looming economic growth scare and further questions whether the Fed is correct in waiting until September to begin its easing cycle.”

Upcoming Economic Data:

• The monthly non-farm payrolls data due at 8:30 a.m. EDT is expected to show job gains of 185,000 for July, down from 206,000 in June. The jobless rate is expected to stay put at 4.1%, while the average hourly earnings, an inflation measure, may have risen at a slower annual rate of 3.7%, down from 3.9% in June.
• The Commerce Department will release its June factory goods orders report at 10 a.m. EDT. The month-over-month decline in factory goods orders is expected to steepen from 0.5% in May to 3.2% in June.

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Stocks In Focus:

• Amazon, Inc. (NASDAQ:AMZN) fell over 8% in premarket trading, Apple, Inc. (NASDAQ:AAPL) rose about 0.80% and Intel Corporation (NASDAQ:INTC) plunged over 20.50%, all in reaction to earnings.
• Other stocks moving on earnings are Block, Inc. (NYSE:SQ) (up over 4%), Booking Holdings Inc. (NASDAQ:BKNG) (down about 7%), Cloudflare, Inc. (NYSE:NET) (up over 7%), DraftKings Inc. (NASDAQ:DKNG) (down over 4%), Microchip Technology Incorporated (NASDAQ:MCHP) (down over 7.50%), Opendoor Technologies Inc. (NASDAQ: OPEN (down about 10%), and Twilio Inc. (NYSE:TWLO) (up over 5%).
• Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), Magna International Inc. (NYSE:MGA), Cinemark Holdings, Inc. (NYSE:CNK) and Fluor Corporation (NYSE:FLR) are among the key companies due to release their earnings reports ahead of the market opening, while AMC Entertainment Holdings, Inc. (NYSE:AMC) will report after the market close.
• The semiconductor space is selling off amid negative headlines, with the iShares Semiconductor ETF (NASDAQ:OXX) down about 2%.

Commodities, Bonds And Global Equity Markets:

Crude futures rose modestly and gold gained ground and traded firmly above the $2,500 mark, marking a fresh record. The 10-year Treasury note yield slid further below the 4% level. Bitcoin (CRYPTO: BTC) flatlined around the $64.5K mark.

The global markets are swathed in a sea of red.

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