U.S. Economic Growth Falters, Impacting Tech Stocks

The stock market in the United States experienced a downturn on Wednesday, mainly affecting technology shares. The broader S&P 500 index (^GSPC) fell by 0.25%, and the Nasdaq Composite (^IXIC) declined by 1.07%. However, the Dow Jones Industrial Average (^DJI) managed to record a slight increase of 0.24%, defying the overall trend.

The disappointing private-sector job growth report contributed to the market slump, with a slowdown noted in March. The number of job vacancies in February, as reported by the Job Openings and Labor Turnover Survey (JOLTS), stood at 9.93 million, significantly lower than the over 10.5 million in January and below the consensus prediction of 10.5 million.

Economic Data Indicates Slowing Economy

Further economic vulnerability was evident in the private payrolls report. In March, private companies added only 145,000 jobs, falling short of the estimated 210,000. According to Nela Richardson, chief economist at ADP, employers have started to scale back after a year of strong hiring and wage growth, leading to a three-month stagnation that is now in decline.

The Institute for Supply Management’s services activity index also pointed to decelerated growth in March, dropping to 51.2, which was lower than the expected 54.4. New orders and prices experienced declines, with new orders dropping from 62.6 to 52.2 and prices falling from 65.6 to 59.5. Although employment rate growth continued, it slipped to 51.3 for the month.

Amid market turbulence, individual stock movements displayed mixed results. Johnson & Johnson (JNJ) shares climbed by 4.5% after the healthcare giant quadrupled its settlement offer for cancer lawsuits related to its baby powder, proposing $8.9 billion to the 60,000 claimants. In contrast, bank stocks slipped, with the KBW Banks Index (^BKX) declining by almost 0.5%. Western Alliance (WAL) performed the poorest, as its shares plummeted over 12% following a preview of its first-quarter results that failed to impress investors.

Meanwhile, the 10-year Treasury note yield sharply decreased to 3.303%, reflecting the stock market decline. On the other hand, gold futures (GC=F) reached their highest level in over a year, approaching a record high due to the labor market’s softening. Crude oil (CL=F) retreated to hover around $80 per barrel after surging on Monday.

In Summary 

In summary, the U.S. stock market, particularly tech shares, faced losses on Wednesday due to weak hiring reports and further signs of economic weakness. The Dow Jones Industrial Average managed to post modest gains, bucking the trend. During this period of market volatility, individual stock movements demonstrated mixed performance, with Johnson & Johnson’s shares advancing while bank stocks retreated.