—— US Unemployment Rate Rises to 4.3%; Qualcomm Share Drops Amid Smartphone Slowdown; Intel Share Drops by Most in 40 Years; Snap Drops 17% Amid Weak Sales Forecast; Chevron Leaves California After 145 Years; Economists See Supersized Rate Cuts This Year; SoftBank Founder to Lose $2.6bn From Stock Drop
1. US Unemployment Rate Rises to 4.3%
US hiring slowed significantly in July, with the unemployment rate rising to its highest level in nearly three years. This suggests a more rapid decline in the labor market than previously anticipated, likely prompting the Federal Reserve to consider cutting interest rates in September.
The Bureau of Labor Statistics reported Friday that nonfarm payrolls increased by 114,000 last month, following downward revisions for the prior two months. This figure was lower than nearly all forecasts in a Bloomberg survey of economists and one of the weakest since the pandemic. Additionally, average hourly earnings fell short of expectations.
The unemployment rate unexpectedly rose for the fourth consecutive month to 4.3%, reflecting more people losing and leaving their jobs rather than new workers entering the labor force.
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2. Qualcomm Share Drops Amid Smartphone Slowdown
A broad gauge of US labor cost growth, closely monitored by the Federal Reserve, cooled in the second quarter more than expected, reinforcing a trend of gradually easing inflationary pressures.
The employment cost index, which tracks wages and benefits, increased by 0.9% in the April-to-June period. This follows the most significant rise in a year at the start of 2024, according to figures from the Bureau of Labor Statistics released on Wednesday. Economists surveyed by Bloomberg had predicted a 1% increase.
These figures support recent data indicating that the labor market is moderating towards its pre-pandemic trend. Other indicators also show cooling wage growth, a slower hiring pace, and rising unemployment.
Fed Chair Jerome Powell testified to Congress earlier this month, stating that the job market is no longer an inflationary force. He is likely to reiterate this assessment at the conclusion of the central bank’s meeting later on Wednesday. While policymakers are expected to keep interest rates steady, Powell might suggest a potential rate cut in September, considering the recent softness in the labor market and a broader easing in price pressures.
Following the report, stock futures and Treasuries extended their gains.
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3. Intel Share Drops by Most in 40 Years
Intel Corp. shares experienced their largest decline in over 40 years after the company issued a bleak growth forecast and announced plans to cut 15,000 jobs, indicating that the chipmaker is struggling to compete in the artificial intelligence era.
The shares plummeted more than 26% after trading began in New York on Friday, erasing approximately $32 billion in market value. This represents the stock’s biggest intraday drop since at least 1982, based on Bloomberg data.
Intel projected sales for the current quarter to be between $12.5 billion and $13.5 billion, significantly below the average analyst estimate of $14.38 billion, according to Bloomberg. The company also forecasted a loss of 3 cents per share, excluding certain items, in contrast to analysts’ expectations of a 30-cent profit.
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4. Snap Drops 17% Amid Weak Sales Forecast
Snap Inc. shares plummeted in extended trading after the company reported disappointing second-quarter sales and issued a lower-than-expected earnings forecast for the current period.
The weak financial performance overshadowed stronger user growth, signaling a setback in the company’s multi-year effort to revitalize its core advertising business.
Snapchat’s parent company posted quarterly revenue of $1.24 billion, slightly below analysts’ expectations of $1.25 billion. For the current quarter, Snap anticipates adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) between $70 million and $100 million, falling short of Wall Street’s forecast of $110.5 million. This news caused the stock to drop 17% in extended trading.
In recent years, Snap has restructured its advertising business to emphasize direct response ads, which prompt users to take specific actions like downloading an app or purchasing a product.
Previously, Snap focused more on brand awareness campaigns, which are cheaper to support but also less profitable. During the transition to the new ad tech model, Snap’s revenue experienced several quarters of decline before returning to growth late last year.
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5. Chevron Leaves California After 145 Years
Chevron Corp., a company rooted in California since the days of kerosene lamps, is relocating its headquarters to Texas after enduring years of stringent environmental policies and costly regulations imposed by Golden State officials.
The move, announced on Friday, marks the end of Chevron’s 145-year tenure in the largest US state. Texas Governor Greg Abbott welcomed Chevron to its “true home,” while a spokesperson for California Governor Gavin Newsom referred to it as a “logical culmination” of Chevron’s gradual transition away from the state.
Chevron had already reduced new investments in California refining, citing “adversarial” government policies in a state known for some of the most rigorous environmental regulations in the US. In January, refining executive Andy Walz warned that California’s climate rules posed a “dangerous game” that could lead to spikes in gasoline prices.
Chief Executive Officer Mike Wirth dismissed suggestions that the move was politically motivated, stating, “it’s really to be closer to the core epicenter of our industry.”
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6. Economists See Supersized Rate Cuts This Year
Wall Street banks are advocating for substantial interest-rate cuts by the Federal Reserve in response to the latest signs of a cooling labor market.
Economists at Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., and JPMorgan Chase & Co. updated their forecasts for US monetary policy on Friday after data revealed a continued rise in the US unemployment rate in July. These banks are now anticipating earlier and more significant interest-rate cuts.
Citigroup economists are forecasting half-point rate cuts in September and November, followed by a quarter-point cut in December. Previously, they had predicted quarter-point cuts at all three meetings. They expect the Fed to continue reducing rates by a quarter point at each meeting until mid-2025, ultimately bringing the policy band to 3% to 3.25%, according to economists Veronica Clark and Andrew Hollenhorst.
Friday’s jobs report indicated a significant slowdown in US hiring, with the unemployment rate climbing to 4.3%, the highest level in nearly three years. This increase in the jobless rate resulted in the three-month moving average exceeding the 12-month low by half a percentage point.
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7. SoftBank Founder to Lose $2.6bn From Stock Drop
A two-day drop in shares of SoftBank Group Corp. has wiped out $2.6 billion from the fortune of its founder, Masayoshi Son, as the tech investor faced the impact of the Bank of Japan’s earlier-than-expected interest-rate hike.
SoftBank shares fell 8% in Tokyo on Friday, contributing to a roughly 14% decline over two days. Despite the recent plunge, Son’s net worth is still up about $2.7 billion from the $11.3 billion he started the year with, according to the Bloomberg Billionaires Index.
Masayoshi Son has been one of the most significantly affected tycoons by the sudden reversal in Japanese stock performance. Tokyo-based SoftBank, one of the world’s largest tech investors, had seen its shares rise by 46% through the end of July.
The company owns a majority stake in chipmaker Arm Holdings Plc, whose shares surged this year due to high expectations around the profitability of artificial intelligence. However, Arm’s shares plummeted 16% on Thursday after it reaffirmed an existing annual sales forecast, disappointing investors.
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本文内容来自《Financial Times》、《Bloomberg》，以及《The Real Deal》等多家财经新闻媒体。