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Nasdaq Today: Jobs Report Alters Rate-Cut Expectations, Moves Tech

July 5, 2019
Investors saw a 0.10% decline in the Nasdaq today, while the S&P 500 slipped 0.24%. However, that's much better than where the markets were in the first few hours of the day on Friday. Stocks initially sold off somewhat hard in the session after the June jobs report was released.Source: Shutterstock The non-farm payrolls report showed that 224,000 jobs were added to the economy in June. That far outpaced economists' expectations of 160,000 jobs and follows the May report which missed analysts' expectations by a wide margin.There were already calls for the Federal Reserve to cut interest rates before the May jobs report was released. Once it missed expectations though, those calls grew even louder. In fact, investors started to clamor for a 50 basis point cut, rather than just a 25 basis point cut.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWith the latest report coming in notably ahead of estimates, the expectations for a 50 bps cut are dwindling quickly. Breaking Down the Rate CutsObviously, the jobs report is the big driver on Friday. Particularly when the market was closed on Thursday for the Fourth of July and while volumes are light. Just hours after the NFP report was released, we now see that Fed Funds futures are calling for a less than 5% chance of a 50 basis point cut. * 3 Earnings Reports to Watch Next Week Notably though, they still call for a 95% chance of a 25 basis point cut. If the Fed opts not to cut interest rates at this month's meeting (July 30-31), it's going to cause issues in the stock market.How do rates relate to tech stocks and the Nasdaq today? The Nasdaq fell almost 1% on the day at the lows, before recovering later in the day. While tech is not the most rate-sensitive sector out there, it's hard to argue that lower rates are bad for tech stocks. It makes borrowing cheaper and given that many of these companies use debt to fuel their growth -- like Tesla (NASDAQ:TSLA) or Netflix (NASDAQ:NFLX) for instance -- that's good for their financials. Further, stock valuations benefit from lower interest rates and when multiples expand, tech is one of the biggest beneficiaries. Click to EnlargeAs for the Nasdaq today, the index made a near-perfect pullback to the key 8,100 level. The index promptly bounced from this mark and closed up toward 8,162. While it did breach 8,100 temporarily, Friday's action was pretty healthy overall. Let's see if 8,100 can hold up as support again next week, and potentially push the Nasdaq to new highs. News in the Nasdaq TodaySamsung (OTCMKTS:SSNLF) warned that its profit fell by 56% in the quarter. Sluggish demand for smartphones and memory chips weighed on the tech giant's bottom line.Given the action and news we've seen and heard from other chip and memory stocks -- Broadcom (NASDAQ:AVGO) and Micron (NASDAQ:MU) for instance -- Samsung's announcement is no surprise. Micron, Nvidia (NASDAQ:NVDA), Intel (NASDAQ:INTC), Skyworks (NASDAQ:SWKS), NXP Semiconductors (NASDAQ:NXPI)...

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Investors saw a 0.10% decline in the Nasdaq today, while the S&amp;P 500 slipped 0.24%. However, that’s much better than where the markets were in the first few hours of the day on Friday. Stocks initially sold off somewhat hard in the session after the June jobs report was released.” data-reactid=”11″>Investors saw a 0.10% decline in the Nasdaq today, while the S&P 500 slipped 0.24%. However, that’s much better than where the markets were in the first few hours of the day on Friday. Stocks initially sold off somewhat hard in the session after the June jobs report was released.

nasdaq today

Source: Shutterstock

The non-farm payrolls report showed that 224,000 jobs were added to the economy in June. That far outpaced economists’ expectations of 160,000 jobs and follows the May report which missed analysts’ expectations by a wide margin.

There were already calls for the Federal Reserve to cut interest rates before the May jobs report was released. Once it missed expectations though, those calls grew even louder. In fact, investors started to clamor for a 50 basis point cut, rather than just a 25 basis point cut.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="InvestorPlace – Stock Market News, Stock Advice &amp; Trading Tips” data-reactid=”26″>InvestorPlace – Stock Market News, Stock Advice & Trading Tips

With the latest report coming in notably ahead of estimates, the expectations for a 50 bps cut are dwindling quickly.

Breaking Down the Rate Cuts

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Obviously, the jobs report is the big driver on Friday. Particularly when the market was closed on Thursday for the Fourth of July and while volumes are light. Just hours after the NFP report was released, we now see that Fed Funds futures are calling for a less than 5% chance of a 50 basis point cut.” data-reactid=”29″>Obviously, the jobs report is the big driver on Friday. Particularly when the market was closed on Thursday for the Fourth of July and while volumes are light. Just hours after the NFP report was released, we now see that Fed Funds futures are calling for a less than 5% chance of a 50 basis point cut.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Notably though, they still call for a 95% chance of a 25 basis point cut. If the Fed opts not to cut interest rates at this month’s meeting (July 30-31), it’s going to cause issues in the stock market.” data-reactid=”32″>Notably though, they still call for a 95% chance of a 25 basis point cut. If the Fed opts not to cut interest rates at this month’s meeting (July 30-31), it’s going to cause issues in the stock market.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="How do rates relate to tech stocks and the Nasdaq today? The Nasdaq fell almost 1% on the day at the lows, before recovering later in the day. While tech is not the most rate-sensitive sector out there, it’s hard to argue that lower rates are bad for tech stocks. It makes borrowing cheaper and given that many of these companies use debt to fuel their growth — like Tesla (NASDAQ:TSLA) or Netflix (NASDAQ:NFLX) for instance — that’s good for their financials. Further, stock valuations benefit from lower interest rates and when multiples expand, tech is one of the biggest beneficiaries.” data-reactid=”33″>How do rates relate to tech stocks and the Nasdaq today? The Nasdaq fell almost 1% on the day at the lows, before recovering later in the day. While tech is not the most rate-sensitive sector out there, it’s hard to argue that lower rates are bad for tech stocks. It makes borrowing cheaper and given that many of these companies use debt to fuel their growth — like Tesla (NASDAQ:TSLA) or Netflix (NASDAQ:NFLX) for instance — that’s good for their financials. Further, stock valuations benefit from lower interest rates and when multiples expand, tech is one of the biggest beneficiaries.

chart of the Nasdaq today

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="
Click to Enlarge
” data-reactid=”46″>
Click to Enlarge

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="As for the Nasdaq today, the index made a near-perfect pullback to the key 8,100 level. The index promptly bounced from this mark and closed up toward 8,162. While it did breach 8,100 temporarily, Friday’s action was pretty healthy overall. Let’s see if 8,100 can hold up as support again next week, and potentially push the Nasdaq to new highs.” data-reactid=”47″>As for the Nasdaq today, the index made a near-perfect pullback to the key 8,100 level. The index promptly bounced from this mark and closed up toward 8,162. While it did breach 8,100 temporarily, Friday’s action was pretty healthy overall. Let’s see if 8,100 can hold up as support again next week, and potentially push the Nasdaq to new highs.

News in the Nasdaq Today

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Samsung (OTCMKTS:SSNLF) warned that its profit fell by 56% in the quarter. Sluggish demand for smartphones and memory chips weighed on the tech giant’s bottom line.” data-reactid=”50″>Samsung (OTCMKTS:SSNLF) warned that its profit fell by 56% in the quarter. Sluggish demand for smartphones and memory chips weighed on the tech giant’s bottom line.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Given the action and news we’ve seen and heard from other chip and memory stocks — Broadcom (NASDAQ:AVGO) and Micron (NASDAQ:MU) for instance — Samsung’s announcement is no surprise. Micron, Nvidia (NASDAQ:NVDA), Intel (NASDAQ:INTC), Skyworks (NASDAQ:SWKS), NXP Semiconductors (NASDAQ:NXPI) and others fell on the news too.” data-reactid=”51″>Given the action and news we’ve seen and heard from other chip and memory stocks — Broadcom (NASDAQ:AVGO) and Micron (NASDAQ:MU) for instance — Samsung’s announcement is no surprise. Micron, Nvidia (NASDAQ:NVDA), Intel (NASDAQ:INTC), Skyworks (NASDAQ:SWKS), NXP Semiconductors (NASDAQ:NXPI) and others fell on the news too.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Shares of Electronic Arts (NASDAQ:EA) were under further pressure Friday, falling more than 4% on the day. The stock is now down 7.5% for the week, as the company releases its second season of Apex Legends. The action is very disappointing, with the stock blowing through various moving averages and solidifying its range resistance. On the plus side though, key support is still holding up.” data-reactid=”52″>Shares of Electronic Arts (NASDAQ:EA) were under further pressure Friday, falling more than 4% on the day. The stock is now down 7.5% for the week, as the company releases its second season of Apex Legends. The action is very disappointing, with the stock blowing through various moving averages and solidifying its range resistance. On the plus side though, key support is still holding up.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Amazon (NASDAQ:AMZN) found itself in the news for a few reasons on Friday.” data-reactid=”53″>Amazon (NASDAQ:AMZN) found itself in the news for a few reasons on Friday.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="First, Amazon filed for permission with the FCC to launch more than 3,200 satellites into orbit with the intention to provide broadband internet. It’s not unlike some of the internet ambitions we’ve heard from companies&nbsp; like Elon Musk’s SpaceX, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Facebook (NASDAQ:FB). Amazon believes its internet plans — called the Kuiper project — can serve tens of millions of customers at one point.” data-reactid=”54″>First, Amazon filed for permission with the FCC to launch more than 3,200 satellites into orbit with the intention to provide broadband internet. It’s not unlike some of the internet ambitions we’ve heard from companies  like Elon Musk’s SpaceX, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Facebook (NASDAQ:FB). Amazon believes its internet plans — called the Kuiper project — can serve tens of millions of customers at one point.

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