By Euronews with AP
Published on
A sharp drop for Google’s parent company yanked the US stock market lower on Thursday, as prices for bitcoin, silver and gold weakened as well. Yields are also sinking in the bond market following discouraging news on the US job market.
The S&P 500 fell 1.2% and is heading towards its sixth loss in the seven days since it set an all-time high. The Dow Jones Industrial Average was down 606 points, or 1.2%, as of 10:45 am Eastern time, and the Nasdaq composite was 1.5% lower.
Google’s parent company, Alphabet, was the heaviest weight on the market and dropped 4.3%, even though they and other businesses reported a stronger profit for the latest quarter than analysts expected.
Alphabet said its spending on equipment and other investments could double this year to roughly $180 billion (€152bn). That blew past analysts’ expectations of less than $119 billion (€100.5bn), according to FactSet.
In the bond market, Treasury yields sank after a report said the number of US workers applying for unemployment benefits jumped last week by more than economists expected, which could signal that the pace of layoffs is accelerating.
Some economists suggested last week’s rise could be statistical noise, and the total number remains relatively low compared with history.
Worst layoff rate since 2009?
But a separate report pointed to a sharp rise in planned job cuts. US employers announced 108,435 layoffs last month, according to outplacement firm Challenger, Gray & Christmas — the highest monthly total since October and the worst January figure since 2009.
A third report from the US government said that employers were advertising fewer job openings in December than both the month before and year before. It was the lowest number in more than five years.
Weakness in the job market could push the Federal Reserve to cut interest rates to support the economy, even if it also risks worsening inflation. Treasury yields fell across the board in response.
The yield on the 10-year Treasury sank to 4.21% from 4.29% late Wednesday.
Metals and commodities yo-yo all week
The moves were even sharper in commodities markets.
Silver prices dropped 13.3% in its latest wild swing since its record-breaking momentum suddenly halted last week.
Gold prices fell 2.3% to $4,838.80 (€4,087.50) per ounce.
The precious metal’s value has been careening back and forth since it roughly doubled in price over 12 months. It neared $5,600 (€4,729.70) last week and then fell below $4,500 (€3,800.70) on Monday.
Both gold and silver had been screaming higher as investors piled into places they thought would be safer amid worries about political turmoil, a US stock market that critics called expensive and huge debt loads for governments worldwide.
But nothing can keep rising at such extreme rates forever, and critics had been calling for a pullback.
Bitcoin also sees heavy drop
Bitcoin, which is sometimes pitched as “digital gold,” also sank. It dropped below $68,000 (€57,432), down from its record above $124,000 (€104,730) set in October.
The tumbling prices dragged down stocks of companies enmeshed in the crypto industry.
Coinbase Global, the crypto trading platform, dropped 8.3%. Strategy, which has made a business of buying and holding bitcoin, tumbled 11.9%.
Outside of crypto, Qualcomm fell 7.2% even though the chip company topped analysts’ expectations for profit and revenue in the latest quarter.
Its forecast for profit in the current quarter fell short of analysts’ expectations as an industrywide shortage of memory pushes some handset makers to cut back on orders.
Estee Lauder also topped Wall Street targets, and it raised its financial forecasts for the full fiscal year. But the cosmetics multinational said it expects tariff-related headwinds to wipe out about $100 million (€84.5mn) worth of profits. The New York cosmetic company’s shares sank 21.2%.
Chips doing better?
On the winning side of Wall Street were some companies that stand to benefit from big spending by Alphabet and other companies continuing the AI frenzy. Chip company Broadcom rose 3.7% and was the strongest force limiting the S&P 500’s losses.
McKesson jumped 16.8% for the biggest gain in the S&P 500 after reporting stronger profit and revenue for the latest quarter than analysts expected. The healthcare company also raised its forecasted range for profit this fiscal year.
In stock markets abroad, indexes fell across much of Europe and Asia.
London’s FTSE 100 fell 0.9% after the Bank of England held interest rates there steady. France’s CAC 40 fell 0.7%, and Germany’s DAX lost 0.9% after the European Central Bank likewise stood pat on interest rates.
South Korea’s Kospi tumbled 3.9% for one of the world’s biggest moves and dropped from its all-time high. Samsung Electronics dropped 6%, just two days after it had surged 11.4%.