Market: Nasdaq declines the most in a week

(CercleFinance.com) - Wall Street ended August on a high note, but this shortened week was the opposite: it resulted in Wall Street's biggest decline in 18 months and the Nasdaq's biggest weekly drop since January 2022.


Serious doubts about the trajectory of growth are being confirmed, and the hypothesis of a -50Pt rate cut on September 19 could mean that the FED has underestimated the deterioration in economic parameters, notably employment (August's 'NFP' is mediocre, June and July are again revised downwards), and is already acting too late, just as it took too long to react against inflation.

As for Friday's session, the S&P500 lost around -1.75% to 5.408, the Nasdaq Composite shed -2.55% (below 16,700) and the Nasdaq-100 -2.7% to 18,520 (or -5.85% weekly) in the wake of Broadcom -1.40%, Tesla -8.5, ASML -5.4%, Marvel -5.3%, Nvidia -4.1%.

The SOXX semiconductor index fell by a further -4.3%, or -12% over the week (in 4 sessions), and is now 2% off the crucial 199/200 lows of August 7, April 19 and February 6.

While several 'much-anticipated' figures this summer ended in a 'non-event', the 'MFN' published at 2.30 pm was a cold shower, perhaps amplified by Broadcom's cautious forecasts (-12%).

The US economy generated +142,000 non-farm jobs in August, a number 15% below market expectations, with a consensus of +165.000.

The unemployment rate eased by 0.1 points to 4.2% last month, where economists had expected it to remain stable at 4.3%; the labor force remained stable at 62.7%.

Mahmoud Alkudsi, analyst at ADSS, believes that "this data (NFP) remains in the register of 'bad news to be welcomed', as it means that a 50 basis point rate cut is clearly on the table to support a labor market that has just had two feverish months".

Wall Street no longer seems to share this view, and the fall in equities is apparently benefiting the bond compartment, with rates falling sharply.

But it's not quite so simple in reality, given the way the session unfolded: the yield on 10-year US Treasury bonds showed unusual volatility, with a veritable 'saloon door' sequence.

It first eased by -8pts to 3.652 before returning to 3.732% as it had the previous day, then eased back to 3.645 (around 5pm) before finally climbing back to 3.7100%.

The '2 yr erased -10pts at 3.645% before recovering +10pts at 3.745% before falling back to 3.6300 and then rising again to 3.650%.

However, since 2.30 p.m., there has been a sort of "invariant": the structure of rates has become "classic" again (and not "inverted"), with the "10-yr" showing 5 to 6Pts more than the "2-yr", which has erased -23Pts over the past week.

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