Nasdaq on pace to confirm correction after weak jobs report; Amazon, Intel sink
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US labor growth misses expectations; unemployment rate rises
Bets up on a half-percentage-point Fed rate cut in September
Chevron down after Q2 profit miss
Indexes down: Dow 1.14%, S&P 1.52%, Nasdaq 2.36%
Updated at 9:55 a.m. ET/1355 GMT
By Ankika Biswas and Shubham Batra
Aug 2 (Reuters) -The Nasdaq Composite was set to plungeinto a correction on Friday, falling more than 10% from its July peak after weak employment numbers aggravatedworries of a slowdown in the U.S. economy, while Amazon and Intel's downbeat forecasts dampened sentiment.
The S&P 500 .SPX hit its lowest level since July 11 and the Dow.DJI was on track for its biggest two-day percentage fall sinceearly March 2023.
A Labor Department report showed nonfarm payrolls rose by 114,000 jobs in July, sharply lower than the 175,000 additions estimated by economists polled by Reuters. The unemployment rate ticked higher, to 4.3%, from 4.1% a month ago.
With fresh evidence of a weakening labor market, traders are now betting the U.S. Federal Reserve will deliver a big half-percentage-point rate cut in September, versus the 25-bps cut expected before the data.
"Now the question isn't will they cut in September, but by how much. With the Sahm rule (a recession gauge) officially being triggered, both the talk of recession and criticism of the Fed will grow louder," said Jay Woods, chief global strategist, Freedom Capital Markets.
At 9:55 a.m. ET, the Dow Jones Industrial Average .DJI was down 458.84 points, or 1.14%, at 39,889.13, the S&P 500 .SPX was down 82.67 points, or 1.52%, at 5,364.01, and the Nasdaq Composite .IXIC was down 405.96 points, or 2.36%, at 16,788.19.
Amazon.com AMZN.O slumped 11.7% after the company reported slowing online sales growth in the second quarter and said cautious consumers were seeking cheaper purchase options.
Intel INTC.O tumbled 26.7% after forecasting third-quarter revenue below estimates and suspending its dividend, starting in the fourth quarter.
Other chip stocks were also set to extend Thursday's losses. Nvidia NVDA.O fell 4.4%, Broadcom AVGO.O lost 3.3%, Micron Technology MU.O shed 5.7% and Arm Holdings ARM.O was down 6.3%.
The Philadelphia SE Semiconductor Index .SOX hit a three-month low, falling 4.5%.
Apple AAPL.O inched 2.3% higher as it posted better-than-expected third-quarter iPhone sales and forecast more gains, betting on AI to attract buyers.
Eight of the 11 S&P 500 sub-indexes fell, with theConsumer Discretionary .SPLRCD sectorleading the lossesand on track for its biggest one-day drop since Sept. 13, 2022.
Other megacaps such as Microsoft MSFT.O and Alphabet GOOGL.O shed around 2% each. Meta META.O also dropped, losing 1.0% after soaring on Thursday after upbeatresults.
Concerns about the dominance of the "Magnificent Seven" group of stocks persist as earnings from most of these Big Tech companies have failed to enthuse investors, underlining fears of their valuations being inflated.
Wall Street's "fear gauge" .VIX breached the long-term average level of 20 points to touchits highest mark sincelast October.
The Russell 2000 small-cap index .RUT was down 3.3%, hitting a three-week low, and was also set for its biggest two-day percentage drop since June 2022.
Among other movers, Snap SNAP.N lost 22.8% after forecasting current-quarter results below expectations.
Chevron Corp CVX.N slipped 1.6% after the oil giant missed estimates for second-quarter profit, hurt by weak refining margins.
Declining issues outnumbered advancers for a 3.04-to-1 ratio on the NYSE, and by a 5.28-to-1 ratio on the Nasdaq.
The S&P index recorded 55 new 52-week highs and 11 new lows, while the Nasdaq recorded 22 new highs and 172 new lows.
Reporting by Ankika Biswas, Shubham Batra and Medha Singh in Bengaluru; Editing by Shounak Dasgupta and Pooja Desai
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