Key Points:
- The mixed labor market report shows higher-than-expected job creation but an unexpected rise in the unemployment rate.
- Costco stock drops 7.64% after reporting revenue below expectations for Q2, while Gap shares surge 8.23% following a strong Q4 performance.
- Chip stocks, including Broadcom and Marvell, face pressure despite positive earnings, while Nvidia experiences speculation on a potential stock split.
The U.S. stock market saw a downturn on Friday, ending a two-week winning streak. Unexpected labor market data and fluctuations in chip stocks drove the decline. The S&P 500, NASDAQ Composite, and Dow Jones Industrial Average all experienced declines with the worst week since October.
The mixed labor market report revealed that while more jobs were created in February than anticipated, the unemployment rate unexpectedly rose, signaling a potential slowdown in economic recovery. Nonfarm payrolls increased by 275,000, surpassing economists’ expectations, but wage growth remained subdued. Analysts are divided on the report’s implications, with some suggesting it may delay anticipated interest rate cuts by the Federal Reserve.
Investors are bracing for further economic data, including consumer inflation figures, which are expected to show another significant increase. Despite the uncertainty, some economists maintain their forecast for rate cuts later in the year, contingent upon a softening of economic indicators.
In corporate news, Costco (NASDAQ:COST) stock plummeted by 7.64% after the company reported second-quarter revenue below expectations. The decline was attributed to weaker demand for higher-priced items, reflecting a more cautious consumer mindset. Conversely, Gap (NYSE:GPS) saw an 8.23% surge in its stock price following a strong performance in the fourth quarter, driven by robust demand for its Old Navy and namesake brands during the holiday season.
Chip stocks faced volatility, with Broadcom (NASDAQ:AVGO) slipping nearly 6.99% despite posting better-than-expected fiscal first-quarter results. Concerns about the company’s full-year guidance weighed on investor sentiment, overshadowing the demand for AI-related products. Similarly, Marvell Technology (NASDAQ:MRVL) fell 11.36% due to disappointing first-quarter guidance, offsetting stronger-than-expected Q4 results. However, Deutsche Bank views the weakness as a buying opportunity, citing potential growth in AI-related revenue.
A leading chip maker, NVIDIA Corporation (NASDAQ:NVDA) experienced a 5.55% decline amid speculation about a potential stock split as its shares approach the $1,000 price level. The uncertainty surrounding the company’s future actions contributed to investor unease in the chip sector.
