In the trading session ended Friday, March 8, 2024, the S&P 500 and Nasdaq witnessed a retreat from record highs, influenced by a reversal in high-flying chip stocks and a labor market report that presented mixed signals.
The market’s initial optimism, fueled by a surge in job growth, was tempered by rising unemployment and lackluster wage growth.
Chip stocks suffered setback
The Philadelphia Semiconductor Index sharply underperformed, concluding the day with a 4 percent dip after touching an intraday record high.
Similarly, Nvidia, a leading artificial intelligence chip player, closed down 5.6 percent, snapping a six-session winning streak. The chip index saw notable declines, with Broadcom sinking 7 percent following a disappointing full-year forecast, and Marvell Technology tumbling 11.4 percent due to first-quarter projections falling below market expectations.
Market reaction to job market data
At the opening bell, stocks rose on the back of a positive jobs report for February, revealing nonfarm payrolls increased by 275,000 jobs, surpassing the anticipated 200,000 rise.
However, the joy was tempered as January’s job numbers were revised lower, and the unemployment rate unexpectedly rose from 3.7 percent to 3.9 percent. Additionally, monthly wage growth slowed to 0.1 percent.
Federal Reserve Chair Jerome Powell’s recent statement that the central bank is nearing confidence in falling inflation to consider interest rate cuts also influenced market sentiment.
Market Performance and Sectoral trends
The Dow Jones Industrial Average fell 0.18 percent to 38,722.69, the S&P 500 lost 0.65 percent to 5,123.69, and the Nasdaq Composite experienced a 1.16 percent decline to 16,085.11.
Among the S&P 500 sectors, technology took the biggest hit, ending down 1.8 percent, followed by a 0.8 percent fall in consumer staples, largely attributed to Costco.
For the week, Real estate emerged as the week’s biggest gainer, closing up 1.1 percent, followed by energy, which added 0.4 percent.
Asia Pacific: Markets respond to Wall Street’s record Highs
Asian markets saw gains, with Japan’s Nikkei, Australia’s S&P/ASX 200, and South Korea’s Kospi surging. Hong Kong’s Hang Seng rose, while the Shanghai Composite slipped slightly. Investors remained cautious despite positive economic data in the region. Reports of Bank of Japan officials’ confidence in wage growth influenced market sentiment.
However, as of market close on Monday March 11, 2024, Japanese stocks experienced a notable decline, with the Nikkei index plunging as much as three percent amidst a strengthening yen against the dollar and a sell-off in semiconductor stocks.
The Nikkei index initially dropped to 38,496.66 during afternoon trade, recovering slightly to settle 2.91 percent lower.
European Market: Record highs and ECB rate cut speculations
European markets closed flat after a week of strong gains that witnessed record highs in German and French shares. Real estate led sectoral gains, while technology faced a setback.
Germany’s DAX touched an all-time high, and France’s CAC 40 hit a record high. Real estate climbed 2.1 percent, while technology lost 1.6 percent due to chip standards concerns affecting BE Semiconductor.
While global markets experienced a rollercoaster ride, the FTSE 100 remained resilient, holding steady amidst record highs and economic uncertainty. In the European landscape, the FTSE 100, representing the UK’s leading companies, maintained its composure amid the mixed signals from Wall Street and the U.S. job report
Conclusion: Navigating uncertainties in global markets
As markets worldwide respond to the dynamic interplay of economic indicators, central bank statements, and corporate performances, investors find themselves navigating a landscape of opportunities and challenges.
The week’s events underscore the importance of staying attuned to global economic dynamics and geopolitical developments, recognizing the interconnected nature of the modern financial ecosystem.
