Intel’s 20% Plunge Spurs Nasdaq 100 Decline Amid Broader Tech Sell-Off

Stock Futures Drop Amid Earnings and Anticipation of Jobs Report

U.S. stock futures declined significantly on Friday, influenced by disappointing quarterly results and anticipation of a critical July payrolls report. Dow Jones Industrial Average futures fell 317 points (0.8%), S&P 500 futures decreased by 1.1%, and Nasdaq 100 futures dropped 1.8%.

Intel’s Sharp Decline

Intel’s latest quarterly report intensified concerns about the company’s future. The chipmaker’s shares plunged 20% in premarket trading, marking their worst one-day drop since 2000. This steep decline followed weaker-than-expected earnings and revenue for Q2 and a $10 billion cost-cutting plan that includes laying off more than 15% of its workforce. The bleak outlook for Intel weighed heavily on market sentiment.

Amazon’s Earnings Miss

Amazon also contributed to the negative market sentiment, with shares sliding 8% after missing second-quarter revenue expectations and issuing a disappointing forecast. This decline follows a broader tech sector sell-off, impacting investor confidence.

Exxon Mobil Beats Expectations

Exxon Mobil reported robust Q2 earnings, buoyed by record production in Guyana and the Permian Basin. Earnings per share were $2.14, surpassing the forecast of $2.01. However, despite the strong performance, Exxon Mobil shares saw a slight dip in premarket trading.

July Jobs Report Anticipation

Attention now shifts to the upcoming July jobs report, a key indicator that could shape market movements. The Labor Department’s Bureau of Labor Statistics is expected to report an addition of 185,000 jobs in July, with the unemployment rate anticipated to remain steady at 4.1%. Average hourly wages are projected to have increased by 0.3% month-over-month and 3.7% year-over-year. This report comes amid growing fears of a potential recession, heightened by recent soft economic data.

Market Volatility and Economic Concerns

Thursday’s sell-off, which saw the Dow and S&P 500 each lose more than 1% and the Nasdaq fall 2.3%, underscores rising concerns about the Federal Reserve’s monetary policy timing. Quincy Krosby, Chief Global Strategist at LPL Financial, noted that the market is questioning whether the Fed is behind in adjusting its policies. Additionally, Arnim Holzer of EAB Investment Group highlighted the increased volatility in the market, particularly within the tech sector, which poses risks to overall market stability. The Russell 2000 index, reflecting small-cap stocks, experienced its worst session since February, dropping 3%.

Market Forecast: Cautious Outlook

Given the current landscape, market sentiment remains cautious. The combination of underwhelming earnings reports from major tech firms like Intel and Amazon, along with the anticipated jobs data, suggests a bearish outlook in the short term. Investors should prepare for continued volatility, especially as economic indicators and corporate earnings further influence market directions.

Technical Analysis

E-mini Dow Jones Industrial Average futures are taking a beating for a second straight session on Friday, with the selling being driven by pressure from Dow components Amazon and Intel.

The market is currently testing the July 24 bottom at 40053. Following this week’s lower top at 41427, a trade through the identified bottom will change the trend to down.

Also on the radar is the 50-day moving average at 39837. We could see a technical bounce on the first test of this level, but if it fails then look out below! The next major target that will come into the picture is the 200-day moving average at 38765.