Stock market today (August 2, 2024): Worries about the economy hit Wall Street, and the Dow drops nearly 500 points

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NEW YORK — Just a day after rallying on hopes that the Federal Reserve is about to cut interest rates, U.S. stocks tumbled Thursday after weak data raised worries the Fed may have missed its window to do so before undercutting the economy’s growth. The S&P 500 sank 1.

NEW YORK — Just a day after rallying on hopes that the Federal Reserve is about to cut interest rates, U.S. stocks tumbled Thursday after weak data raised worries the Fed may have missed its window to do so before undercutting the economy’s growth.

The action was even stronger in the bond market, where the yield on the 10-year Treasury tumbled below 4%, back to where it was in February. Besides the soft manufacturing data, reports earlier in the morning showed that the number of U.S. workers applying for jobless benefits hit its highest level in about a year and that productivity for U.S. workers improved during the spring.

“Markets are thinking maybe the Federal Reserve should have cut yesterday,” according to Jamie Cox, managing partner for Harris Financial Group. The weak economic numbers raise the stakes for an already highly anticipated employment report coming on Friday. Economists expect it to show a slight slowdown in U.S. hiring last month, and Wall Street’s hope is for a Goldilocks type of reading that is neither so hot that it puts upward pressure on inflation nor so cold that it worsens worries about a possible recession.

Uncertainty was high heading into its report after other members of the highly influential group of stocks known as the “ Magnificent Seven ” had underwhelmed investors. This handful of Big Tech stocks drove the S&P 500 to dozens of records this year, in part on the frenzy around artificial-intelligence technology. But their momentum turned last month on worries investors had taken their prices too high and expectations for their profit gains had grown too difficult to meet.

All told, the S&P 500 fell 75.62 points to 5,446.68. The Dow dropped 494.82 to 40,347.97, and the Nasdaq tumbled 405.25 to 17,194.15.

 

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