US close: Stocks sharply lower for second-straight session

dl nyse new york stock exchange new york city nyc wall street wall st nasdaq markets trading finance unsplash — Sharecast / David Vives via Unsplash

Wall Street stocks closed sharply on Friday amid resurgent fears of a potentially oncoming recession.

At the close, the Dow Jones Industrial Average was down 1.51% at 39,737.26, while the S&P 500 lost 1.84% to 5,346.56 and the Nasdaq Composite saw out the session 2.43% weaker at 16,776.16.

The Dow closed 610.71 points lower on Friday, extending losses recorded in the previous session as fears that it may be too late for the Fed to start cutting rates if it wants to avoid a recession sent shares sharply lower.

Friday's primary focus was July's nonfarm payrolls report, which revealed hiring in the US slowed abruptly last month, prompting talk in markets of "policy mistakes" by the central bank and of a "growth scare".

According to the Department of Labor, non-farm payrolls rose by 114,000 in July, below economists' expectations for an increase to 175,000. Hiring for the prior two months combined was also revised down by 29,000 and the rate of unemployment jumped by two-tenths of a percentage point from the month before to 4.3%, ahead of consensus estimates for an unchanged reading of 4.1%

"The sharp slowdown in payrolls in July and sharper rise in the unemployment rate makes a September interest rate cut inevitable and will increase speculation that the Fed will kick off its loosening cycle with a 50 bp cut or even an intra-meeting move, although it’s worth noting that the Sahm Rule has not actually been triggered yet," said Stephen Brown, deputy chief North America economist at Capital Economics.

Corporate earnings were also in focus on Friday after online retail giant Amazon missed Wall Street estimates with its second-quarter earnings and issued disappointing full-year guidance, while Intel shares sunk after announcing it would be making layoffs, and tech giant Apple shares ticked lower despite posting a Q3 earnings beat.

Reporting by Iain Gilbert at Sharecast.com

Dow Jones - Risers

Unitedhealth Group Inc. (UNH) $589.83 2.98%
McDonald's Corp. (MCD) $276.69 2.95%
Procter & Gamble Co. (PG) $170.08 2.65%
Johnson & Johnson (JNJ) $164.14 2.10%
Coca-Cola Co. (KO) $69.33 2.02%
Merck & Co. Inc. (MRK) $115.20 1.21%
Travelers Company Inc. (TRV) $214.53 1.17%
Verizon Communications Inc. (VZ) $40.97 0.29%
Visa Inc. (V) $266.58 0.24%
Nike Inc. (NKE) $74.01 0.22%