Market Hit By Low Jobs Data, Layoffs
In this article:
- Lower job openings data hits market
- Layoffs ahead for major companies
- Technology continues 2022 struggles
Oh, snap, how the market loves misery.
Announcements of job layoffs and fewer new jobs spurred the three major indexes as the stock market popped higher to start the open session today.
Slower growth feeds the market desire to stunt future federal monetary tightening efforts.
But the uptick didn’t last as jobs data and companies planning workforce cuts came into play.
Euphoria turns south in early trading
The euphoria of economic misery didn’t last long as all three major indexes flipped into the red in an early morning drop.
The back-and-forth price action in the stock market followed the latest U.S. ADP National Employment Report showing companies adding only 132,000 jobs in August. This was well below the 270,000 jobs added in July and less than half the 288,000 expected by economists.
“Our data suggests a recent shift toward a more conservative pace of hiring, possibly as companies try to decipher the economy’s conflicting signals,” according to ADP Chief Economist Nela Richardson. “We could be at an inflection point, from super-charged job gains to something more normal.”
The jobs report arrived as major companies announced layoffs.
Snap, Inc., parent of Snapchat instant messaging platform, announced plans to lay off 20% of its employees while Bed Bath and Beyond also expects to shed 20% of its workforce and close 150 of its lower-producing stores.
Snap has seen lower revenue growth and Bed Bath and Beyond has struggled as a home goods retailer in recent years.
Snap (SNAP) was up 7.34% and Bed Bath and Beyond (BBBY) was down 21.30% through late morning trading today. Snap announced a restructuring plan while Bed Bath and Beyond acquired new partnerships and financing.
This follows previous warnings from Apple (AAPL) and Facebook (now Meta) with expected slowdowns in hiring and spending to reduce workforces.
Retailers, tech struggling this year
Across retailers and technology companies, cuts can be attributed to supply issues, and higher costs of business due to lost sales in overseas operations thanks to the U.S. dollar spiking higher. The dollar closed at $108.77 on Tuesday and slipped in late morning trading today to $108.58.
How far cuts will spread through FAANG companies is yet to be determined.
FAANG refers to technology companies that include Facebook (now Meta), Amazon, Apple, Netflix, and Google (now Alphabet). FAANG stocks hold more valuation than most other stocks combined. This group has suffered continued weakness so far this year.
Other notable downside influence included less-than-expected earnings reports for HP, Inc., and Chewy, Inc.
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