Stock market news today: Tech stocks crushed, 10-year falls below 4% as weak data shows cracks in US economy

Apple (AAPL) shares traded on both sides of the flat line in after-hours trading after the tech giant posted better-than-expected third-quarter earnings Thursday night.

For the quarter, Apple reported earnings per share of $1.40 and revenue of $85.78 billion. Analysts had expected apple to report earnings per share of $1.35 and revenue of $84.4 billion, according to estimates compiled by Bloomberg.

Yahoo Finance's Daniel Howley reports:

Wall Street was closely watching Apple's performance in China, one of its most important markets, as the company has fought to regain market share from homegrown rivals including Huawei. The announcement also comes as Apple prepares to launch its next iPhone in September.

Apple saw revenue out of Greater China top out at $14.7 billion. Analysts surveyed by Bloomberg were expecting revenue of $15.2 billion. Apple reported China revenue of $15.7 billion in the same quarter last year. Overall iPhone sales hit $39.2 billion versus expectations of $38.9 billion, falling short of the $39.6 billion Apple saw in Q3 2023.

Despite the miss, Apple's Luca Maestri told Yahoo Finance's Josh Lipton that the company's sales are generally improving in the region. What's more, Maestri said Apple is seeing record upgrades in the country.

Services revenue hit $24.2 billion. Wall Street was anticipating revenue in the segment of $23.9 billion. Apple's iPad sales topped $7.1 billion compared to the $6.6 billion analysts were anticipating, on the strength of the company's new iPad Pro line.

Thu, August 1, 2024 at 9:25 PM GMT+1

Amazon (AMZN) stock fell over 4% in after-hours trading on Thursday after the company reported revenue figures that came in shy of expectations while its guidance disappointed.

Net sales for Amazon rose 10% over the prior year with its cloud segment AWS leading the way, seeing revenues rise 19%. AWS results also drove most of the improvement in its operating income, which nearly doubled to $14.7 billion from $7.7 billion last year. AWS operating income rose to $9.3 billion from $5.4 billion a year ago.

The company's current quarter outlook, however, disappointed with revenue forecasts coming in at $154-$158.5 billion, below the Street's outlook for sales of $158.4 billion, according to Bloomberg data.

Current quarter operating income is expected to come in between $11.5-$15 billion; analysts had expected the company to guide to operating income closer to $15 billion for the quarter.

Thu, August 1, 2024 at 9:16 PM GMT+1

Intel (INTC) stock fell as much as 10% in after-hours trading on Thursday after the company reportedweak second quarter results, offered a downbeat forecast, confirmed expected job cuts, and suspended its dividend as the chip giant struggles to keep pace with key rivals amid an industry-wide rush towards AI technologies.

In its press release, Intel CEO Pat Gelsinger called the company's second quarter performance "disappointing," adding that "Second-half trends are more challenging than we previously expected."

Between its job cuts and other efficiency initiatives, the company expects its capex in 2025 to come in $10 billion below its previous estimates.

Thu, August 1, 2024 at 9:00 PM GMT+1

Thursday's market action was highlighted by a move lower in rates following a string of weaker-than-expected economic data.

As seen in the chart below, investors are now pricing in steeper rate cuts for 2024. But despite recent trends of areas like small caps ripping higher as Fed rate cut bets amp up, the opposite happened on Thursday.

This was a noted shift from investors. After a month of more rate cuts meant rallies in areas that could benefit from a soft landing in the US economy, more rate cuts meant worries about the economy and stock market selloff on Thursday.

As of Thursday, markets are now pricing in a full three interest rate cuts in 2024, with the odds of a 50 basis point cut in September on the rise.

Thu, August 1, 2024 at 8:16 PM GMT+1

Nvidia is down more than 7% as part of a broader market selloff on Thursday.

Yahoo Finance's Ines Ferre reports:

Shares of the AI chip heavyweight declined along with the rest of the Tech sector (XLK) after weak economic data released during the session sent the 10-year Treasury (^TNX) yield lower and stocks fell.

The stock decline was a reversal from theprior session's monster 13% rally after peer AMD (AMD) posted better-than-expected quarterly results and guidance in a sign that investments in AI haven't slowed down.

"These hyperscalers ... their capital expenditures are high and potentially even rising into 2025. So this bodes incredibly well for Nvidia,” said Harvest Portfolio Management co-chief investment officer Paul Meeks on Thursday.

Nvidia doesn't reveal who its largest customers are, but according to Bloomberg data, Meta Platforms (META), Amazon (AMZN), Alphabet (GOOGL,GOOG) and Microsoft (MSFT) account for more than 40% of Nvidia's top line.

Microsoft makes up roughly 19% of the AI chipmaker's revenue, according to Bloomberg data. This week the tech giant revealed capital expenditures of almost $56 billion for the full year ending June 30.

Microsoft said it expects to increase its infrastructure investments in fiscal year 2025 more than it did in 2024.

"The fear of potentially some of this momentum not lasting, or maybe fear that the revenue trajectory wouldn't be there over the next 12 months or so — I think is starting to ease," CFRA senior equity analyst Angelo Zino told Yahoo Finance on Wednesday.

Thu, August 1, 2024 at 7:30 PM GMT+1

As stocks were ripping on Wednesday, all was not necessarily well across financial markets.

And the first tell came from crypto.

Bitcoin (BTC-USD) prices were down about 5% on Thursday, but the latest slide from around $67,000 towards today's lows under $63,000 began just after US equity markets closed on Wednesday.

With bitcoin and ether ETFs having gained approval from the SEC and these instruments likely to make their way into more portfolios of the typically staid variety from savers of all kinds — not just the risk-taking early adopters accustomed to swings of this magnitude on a regular basis — the role crypto plays both as a barometer of markets and, in this case, a leading indicator of unease below the surface is likly to rise over time.

Thu, August 1, 2024 at 7:24 PM GMT+1

August has just begun, but after Wednesday's Fed meeting all the market's attention turned to September.

The road between here and there, however, appears to come with a new set of terms and conditions from the environment that prevailed up to and through the Fed's decision to hold interest rates steady this week.

Which, as one trader put it on Twitter this morning, is that bad news is bad news again.

One of the market's most enduring and maddening clichés says that good news is bad news (and vice versa).

The logic on this one basically says that given stocks prefer interest rates to be lower, all else equal, negative economic developments that would either keep rates low or prompt future rate cuts are good for risk assets.

Except right now, there's no doubt about the future outlook for interest rates — they are going lower in seven weeks.

Now, it is possible (if not likely) a series of days like today would prompt a more serious discussion about a 0.50% rate cut instead of the 0.25% cut expected by most. But the direction of rates is not in question.

Which means when we get a couple of economic data reports like this morning's one-two punch of rising jobless claims and soft manufacturing output, investors take it at face value.

Bad news for the economy is bad news for stocks because a worse economy is worse for most businesses.

Any relief investors might see from falling interest rates? That's already in the price.

Thu, August 1, 2024 at 6:22 PM GMT+1

Another recession indicator is close to flashing red.

The Sahm Rule, developed by economist Claudia Sahm, says that the US economy has entered a recession if the three-month average of the national unemployment rate has risen 0.5% or more from the previous 12-month low. The rule has successfully predicted recessions 100% of the time since the early 1970s.

If Friday's July jobs report reveals the unemployment rate rose to 4.2% during the month, the Sahm Rule would be triggered.

But economists, including Sahm herself, are cautious about such an outcome being used to conclude a recession is imminent for the US economy given the current economic backdrop.

"The rise in the unemployment rate is not as ominous as it would normally seem," Sahm wrote in a July 26 post on Substack.

Sahm reasons that the current uptick in unemployment doesn't account for recent shifts in the labor market that haven't been as common in prior occurrences where the Sahm Rule was triggered, including pandemic distortions of labor force participation and a massive increase in immigration.

"In past recessions, the share of entrants — those without work history or those returning to the labor force — fell," Sahm wrote. "The weakening in the labor market discourages them from looking for work. Currently, the entrant’s share is unchanged. That would be consistent with increased labor supply from immigrants pushing up unemployment and not a sign of weakening demand as is typical in a recession."

Bank of America Securities head of US economics Michael Gapen recently told Yahoo Financehe also doesn't see the Sahm rule as a useful recession tool in the current economic moment.

"The unemployment rate is rising largely because growth in the labor force from immigration is outpacing labor demand," Gapen said.

For now, Gapen said, the recent uptick in unemployment is not a story about firms cutting costs through more layoffs.

Asked whether he was worried about the Sahm rule getting triggered at a press conference Wednesday, Federal Reserve Chair Jerome Powell said, "The question really is one of are we worried about a sharper downturn in the labor market. The answer is we are watching carefully for that." He characterized the rule as a "statistical regularity." "It's not like an economic rule where it's telling you something must happen."

Thu, August 1, 2024 at 5:20 PM GMT+1

Mortgage rates dropped to their lowest level since early February after the Federal Reserveset the stage for a September interest rate cut.

The average rate on the 30-year fixed-rate mortgage fell to 6.73% from 6.78% a week prior, Freddie Mac reported on Thursday. A year ago, the average rate on a 30-year fixed-rate loan was 6.9%.

Separately, the average rate for the 15-year fixed mortgage was 5.99%, down from 6.07% a week prior. The rate on a 15-year loan was 6.25% a year ago.

The data's release came a day after the Fed held interest rates steady at its July policy meeting but hinted that it's closer to cutting rates as it cited "some further" progress on inflation. Fed Chair Jerome Powell told reporters a September cut "could be on the table."

The decline is a welcome decline for prospective homebuyers grappling withaffordability.Home prices hit another record in May.

“Expectations of a Fed rate cut coupled with signs of cooling inflation bode well for the market, but apprehension in consumer confidence may prevent an immediate uptick as affordability challenges remain top of mind. Despite this, a recent moderation in home price growth and increases in housing inventory are a welcoming sign for potential homebuyers," Sam Khater, Freddie Mac’s chief economist, said in a release.

Thu, August 1, 2024 at 5:06 PM GMT+1

The Nasdaq and S&P 500 tumbled on Thursday as technology and energy stocks led the declines.

The S&P 500 Technology Sector ETF (XLK) fell more than 2%. Shares of Nvidia (NVDA) dropped more than 3% along with other chip stocks.

The Energy Sector (XLE) also dropped more than 2%. Interest rate sensitive stocks such as Real Estate (XLRE) and Utilities (XLU) rose during the session.

The S&P 500 (^GSPC) fell about 1%, while the tech-heavy Nasdaq Composite (^IXIC) also dropped more than 1.4%. The Dow Jones Industrial Average (^DJI) slid roughly 500 points.

The rollover in major averages occurred mid-morning, erasing early session gains after the 10-year Treasury (^TNX) yield moved below the 4% level to hover near 3.98% for the first time since February.

The move in bonds came a day after Fed Chair Jerome Powell hinted a September rate cut. Weak ISM manufacturing data and a spike in jobless claims released on Thursday pointed to signs of a cooling economy.

Thu, August 1, 2024 at 4:37 PM GMT+1

Semiconductor stocks slipped on Thursday as the major averages rolled over, erasing early morning gains.

AI chip giant Nvidia (NVDA) fell more than 2% after gaining nearly 13% in the prior session. Broadcom (AVGO) and ASML (ASML) also dropped more than 4%.

Chips were on fire during Wednesdays session after AMD (AMD) posted better than expected results and Microsoft (MSFT), a buyer of AI chips, said it increased capital expenditures on its data center infrastructure.

Thu, August 1, 2024 at 4:02 PM GMT+1

Stocks erased early morning gains, sinking into red territory as the 10-year Treasury (^TNX) yield fell below the 4% level for the first time since February.

The S&P 500 (^GSPC) dropped 0.7%, while the tech-heavy Nasdaq Composite (^IXIC) fell roughly 0.9%. The Dow Jones Industrial Average (^DJI) sank 0.9%.

As Yahoo Finance's Josh Schafer reported, the US manufacturing sector sank further into contraction territory in July. The ISM's manufacturing PMI registered a reading of 46.8 in July, down from June's reading of 48.5 and lower than the 48.5 economists expected, according to Bloomberg data.

Meanwhile, weekly jobless claims once againrose more than expected last week, in the latest sign of a cooling labor market.

The move lower in stocks comes after a hefty rally on Wednesday following Fed Chair Jerome Powell's comments at the conclusion of the central bank's two-day policy meeting. Powell laid the groundwork for the likelihood of an interest rate cut in September.

Thu, August 1, 2024 at 3:26 PM GMT+1

On Thursday, the 10-year Treasury (^TNX) yield moved below the 4% level to hover near 3.98% for the first time since February.

The move comes a day after Fed Chair Jerome Powell said a September rate cut was "on the table."

Thu, August 1, 2024 at 3:06 PM GMT+1

The US manufacturing sector sank further into contraction territory during July.

The ISM's manufacturing PMI registered a reading of 46.8 in July, down from June reading of 48.5 and lower than the 48.5 economists expected, according to Bloomberg data. The reading was the lowest since November 2023.

A print above 50 for this index indicate an expansion in activity, while one below 50 indicates contraction.

“Demand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and other conditions," chair of the Institute for Supply Management Timothy Fiore said in a release.

Thu, August 1, 2024 at 2:31 PM GMT+1

Stocks opened higher on Thursday to build on the prior session's rally after the Federal Reserve laid the groundwork for a September rate cut and Facebook parent Meta (META) reported better than expected results.

The S&P 500 (^GSPC) climbed 0.4%, while the tech-heavy Nasdaq Composite (^IXIC) gained almost 0.5%. The Dow Jones Industrial Average (^DJI) edged up 0.4%.

Stocks rose after Fed Chair Jerome Powellsaid on Wednesday that a September interest-rate cut "could be on the table."

Meta shares rose about 8% after a strong quarterly report from the social media giant. Like other Big Tech firms, Meta said it expects "significant" capital-expenditure growth in 2025 as it builds out its AI-focused infrastructure.

Thu, August 1, 2024 at 2:06 PM GMT+1

Weekly jobless claims once againrose more than expected last week, in the latest sign of a cooling labor market.

New data from the Department of Labor showed 249,000 initial jobless claims were filed in the week ending July 27, up from 235,000 the week prior and above the 235,000 economists had expected. This marked the highest level of weekly filings since August 2023.

Meanwhile, the number of continuing applications for unemployment benefits once again hitits highest level since November 2021, with 1.877 million claims filed in the week ending July 20, up from 1.84 million the week prior.

"The claims data of the past few weeks have been signaling incremental labor market weakness, albeit from a position of strength," Jefferies US economist Thomas Simons wrote in a note on Thursday. "This is another step in the process of the labor market coming into better balance, but we must remain vigilant in watching for signs of slack. We are particularly concerned about a negative impulse in the labor market data, but things can deteriorate quickly once they start."