U.S. equities declined on Friday as chipmakers were stung by a revenue warning from Advanced Micro Devices and as strong job growth and a decrease in the unemployment rate last month increased the likelihood of further jumbo-sized interest rate hikes.
According to the carefully watched employment data from the Labor Department, nonfarm payrolls rose by 263,000 jobs in September after increasing by 315,000 in August.
The survey also revealed that the unemployment rate decreased to 3.5% in September, which was less than the 3.7% forecast. From 83.4% before the data, traders now predict that the Federal Reserve will raise interest rates by 75 basis points.
Fears of a slowdown in economic growth and a decline in business profits have been fueled by an aggressive rise in borrowing prices, but the U.S. central bank was likely to maintain its monetary tightening strategy given the continued tightness of the labor market.
Due to lower-than-expected third-quarter revenue expectations of around $1 billion, AMD lost 10.82% of its value.
Peers Nvidia Corp., ON Semiconductors, Lam Research, Qualcomm Inc., and Intel Corp. all had losses ranging from 2.44% to 6.63%.
The S&P 500 technology sector index experienced the largest decrease of the 11 major sector indices, dropping more than 3%.
At 11:56 a.m. ET, the Nasdaq Composite was down 344.02 points, or 3.11%, at 10,729.30, the S&P 500 was down 82.39 points, or 2.20%, and the Dow Jones Industrial Average was down 495.62 points, or 1.66%, at 29,431.32.
All three of the major Wall Street indices are still on track to end a three-week losing trend and are expected to post their largest weekly gains in over a month.
The majority of rate-sensitive technology and growth firms, including Alphabet Inc., Amazon.com, Apple Inc., and Microsoft Corp., declined by 2.14% to 4.46% as the benchmark 10-year Treasury yield increased to 3.910%.
The company’s division that manages the majority of e-commerce deliveries plans to cut volume predictions as its clients plan to ship fewer holiday parcels, according to an internal letter obtained by Reuters, which caused FedEx Corp to lose 2.42% of its value.
On the NYSE and the Nasdaq, declining issues outnumbered advancing issues by a ratio of 4.96 to 1 and 3.79 to 1, respectively.
Compared to the Nasdaq, which had 16 new highs and 214 new lows, the S&P index saw two new 52-week highs and 54 new lows.
