Week of 07/29-08/02 Market Selloff, Weak Jobs Report, FED Leaves Rates Unchanged, Tech Earnings Miss

Stocks fell sharply on Thursday as July’s job growth slowed more than expected and big tech earnings delivered disappointing results. The selloff continued on Friday as investors fear a market correction after the S&P 500 experienced the biggest single day loss in the last two years. The Federal Reserve announced no change in monetary policy for their July meeting, but gave investors confidence that an interest rate cut is happening really soon. The majority of economist and analysts are forecasting two rate cuts in September and November of 50-basis points each. With the market sliding heavily this week, many investors and traders are starting to question whether the central bank has taken too long to react and may cause more damage to the economy in the long run. Big tech did not perform well this week with most companies reporting earnings miss. Intel was down over 25% on Friday after missing earnings and announcing a $10 billion cost reduction plan which includes a 15% workforce layoff. Apple and Amazon also fell during their earnings calls due to weak next quarterly forecasts and lagging sales. Meta was the outcast of the Magnificent 7 losses with its stock soaring over 9% after-hours, reporting better-than-expected earnings results. August is historically not a great month for the market, but investors and traders are hopeful we begin a new trend this year.

How do interest rates affect our economy?

Interest rates have a significant impact on the economy as they influence borrowing, spending, saving, and investment behavior. In general, lower interest rates can stimulate economic growth by encouraging borrowing and spending, while higher interest rates can help curb inflation and prevent an overheating economy by reducing borrowing and spending. Additionally, changes in interest rates can affect the cost of mortgages, business loans, and credit, ultimately influencing consumer and business decisions and overall economic activity.