Why the stock market is going crazy today

• The stock market was in shambles on Friday, with all three major indexes falling sharply.

• Investors are digesting a set of weaker-than-expected data and questioning the Fed.

• They are also struggling with disappointing profits from mega-cap tech companies, headlined by Amazon.

The US stock market plunged into chaos on Friday as investors digested a string of negative economic data and disappointing earnings from mega-cap tech companies.

All three major US indices closed more than 1.5% lower, with technology and small caps taking the biggest hit. The Dow Jones industrial average fell nearly 1,000 points at intraday lows. The moves continued a market-wide skid that began Thursday. The S&P500 finished down 3% in just two days, while technology was heavy Nasdaq Composite is almost 5% over the period, and is now there correction area.

The sell-off started to gain momentum on Thursday amid a slew of weak data points. Jobless claims rose near one a year highas production data came in well below estimates.

Investors became even more discouraged after Thursday’s closing bell due to disappointing earnings reports Amazon And Intel. Amazon missed its second-quarter sales forecast and issued light guidance for the third quarter. Intel, meanwhile, announced plans to lay off 15,000 workers and gave a gloomy growth forecast. The stock price fell as much as 30%, the biggest single-day drop since at least 1982.

Stock futures were already deep in the red on Friday morning. Then, after the fair, investors seemed to throw in the towel jobs report. The economy created 61,000 fewer jobs than expected in July, and unemployment unexpectedly spiked to 4.3%, triggering a widely followed recession indicator, the so-called recession indicator. Sahm rule.

The sell-off appears to signal a shift in how investors interpret weak economic data. Months ago, signs of a slowing economy would boost expectations for Fed rate cuts, seen as rocket fuel for stocks.

But now that a cut in September has been priced in with certainty, investors are wondering whether the economy is weakening too quickly.

“Bad news is no longer good news for equities,” John Lynch, the chief investment officer at Comerica Wealth Management, said in a statement Friday. “Pressure will escalate on the Federal Reserve as market rates will continue to try to squeeze their hand.”

Some are even wondering if the Fed miscalculated and made a mistake with its rate cuts.

“Oh boy, did the Fed make a policy mistake? The labor market slowdown is now manifesting with more clarity,” said Seema Shah, the chief global strategist at Principal Asset Management, adding that job growth had fallen below levels typically is for a “solid economy.”

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She added: “A September rate cut is on the cards and the Fed will be hoping they haven’t been too slow to act again.”

Economists at the New York Fed praise one 56% chance that the economy will enter a recession by June next year.

Meanwhile, interest rate cut prospects on Wall Street have become much milder in recent days. Bets on a 50 basis point rate cut in September have risen to 75% CME FedWatch tool. That is much higher than the 12% odds of a week ago. In short, the consensus has shifted from a 25 basis point move to 50 within days.

“This is further evidence that the economy is slowing, worrying many that the Fed is now firmly behind the eight ball,” Ryan Detrick, chief market strategist at the Carson Group, said in a note. “It’s becoming clear that the Fed should be more concerned about the economy than inflation, increasing the likelihood of a 50 basis point rate cut in September.”

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