Tech Stocks Drop 2% After Strong Jobs Report

Barry Adams
03 Jun, 2022
New York City

U.S. stocks fell sharply after the latest jobs report showed economic strength and provided one more reason to raise rates. 

The S&P 500 index declined 1.7% to 4,106.76 and the Nasdaq Composite index fell 2.5% to 12,005,34. 

Non-farm businesses added 390,000 net new jobs, sharply higher than 325,000 expected by most economists, data from the Bureau of Labor Statistics showed today. 

The pace of job additions was the slowest since April 2021 but faster than anticipated by many economists. 

Investors feared that the job market strength will factor in Fed's decision to lift rates higher and faster. 

The Federal Reserve is set to lift rates 50 basis points in June and July. 

Bod market took a note of the job market strength and the yield on 10-year Treasury notes increased to 2.966%. 

Futures of crude oil increased $1.75 to $118.64 and natural gas added 8 cents to $8.56 a unit. 

Investors fear higher rates may slow the fragile economy faster than expected and discount future earnings more making growth and tech stocks less attractive.  

The fears of rising rates have already contracted tech stock valuations on the basis of earnings between 20% and 30% in the last two months and tech-heavy Nasdaq Composite has declined 24.2% in the year-so-far. 

Tech stocks led the decliners again today and Microsoft fell 1.8% to $269.52. 

Tesla Inc dropped 8.5% to $709.28 after CEO Elon Musk in an internal memo announced a hiring freeze and 10% job cuts at the electric automaker.  

Nividia dropped 3.8% to $188.34 and Micron Technology plunged 6.7% to $70.29. 

Apple Inc declined 3.7% to $145.72 after Morgan Stanley in a research note cautioned slowing App store sales may impact short term outlook for the company.  

Joann Inc plunge 19.8% to $6.39 after the specialty retailer reported quarterly loss of of $35.1 million or 86 cents a share compared to profit of $15.1 million or 38 cents a year ago. 

Revenues fell short of expectations to $498 million, a 13% decline from a year ago.  

Both Nasdaq Composite and S&P 500 indexes are down 1% in the holiday-shortened week.