US stock market plunges on weak jobs data, tech-heavy Nasdaq enters correction mode

The US stock market continued its slide for a second day in a row, with all the frontline equity indices recording a sharp decline. The slide was triggered by the weaker-than-expected data related to jobs released by the country's labour department.

The Dow Jones Industrial Average settled 1.51%, lower at 39,737.26, whereas the S&P 500 closed 1.84% lower at 5,346.56.

A day earlier, on Thursday, S&P 500 logged its worst-day since 2022, and Nasdaq crashed over 3% as a survey showed the US manufacturing activity contracting more than expected in July.

Weak jobs data

The weak manufacturing data was followed by the US Labor Department's monthly report on employment released on Friday. It showed non-farm payroll jobs rising by only 114,000 in July, lower than Dow Jones estimate of 185,000.

The numbers were also down as compared to the addition of 179,000 new non-farm payroll jobs in June.

Apart from the slump in job addition, the unemployment rate also soared to 4.3%, the highest since October 2021.

This has shifted the market's perception towards the US economy as one which is in a growth phase to that which requires early government intervention in the form of interest rate cuts, analysts said.

The US Federal Reserve has indicated that it could reduce the benchmark lending rates, which are at a historic high, in its monetary policy review meeting scheduled in September.