Magnificent 7 Lose Over $300B As Volatility Index Surges, Traders Question Fed's Timing: What's Driving Markets Friday?

Wall Street is experiencing a sharp decline on the last trading day of the week, with all indices in the red at noon in New York, as a cooler-than-expected July jobs report rattled risk sentiment and sparked concerns that the Federal Reserve may have erred in delaying a rate cut until September.

Nonfarm payrolls slowed to 114,000 in July, a decline of 65,000 from June and well below the expected 150,000. More alarmingly, the unemployment rate increased from 4.1% to 4.3%.

As a result, market-implied probabilities over a 50-basis-point cut in September have spiked to 73%, according to CME Group FedWatch tool.

The tech-heavy Nasdaq 100 has entered a correction phase after surpassing a 10% drawdown since its July peak. Mega-cap, high-quality tech stocks offered no refuge to investors, as the Magnificent Seven giants all suffered losses except for Apple Inc., buoyed by an upbeat earnings report. Collectively, the Magnificent Seven lost over $300 billion in market value on Friday alone.

The CBOE Volatility Index (VIX), popularly known as the market’s fear gauge, surged over 30% to reach the high-20 levels.

Small caps were again the weakest segment of the market, given their heightened sensitivity to economic fundamentals. The Russell 2000 tumbled over 3%, extending declines after a 3.4% loss on Thursday.

Consumer discretionary and technology were the worst-performing sectors, while semiconductors led the selloff among industries. The iShares Semiconductor ETF SMH plummeted over 5%, marking a double-digit loss in the last two sessions, its worst performance since March 2020.

Nvidia Corp. fell an additional 3.4% following a 6.7% decline on Thursday, as the chipmaker came under investigation by the U.S. Department of Justice for potential antitrust violations.

Treasuries were the biggest gainers among major assets, reflecting a broad-based flight-to-quality sentiment. The iShares 20+ Year Treasury Bond ETF TLT rallied 2.9%, its strongest performance since the U.S. regional bank crisis in March 2023.

The Japanese yen also gained significantly, with the Invesco CurrencyShares Japanese Yen Trust FXY up 1.8%.

Gold edged down slightly by 0.6%, while oil prices fell more than 4% for the day, with West Texas Intermediate (WTI) light crude retreating to $72 a barrel.

Bitcoin BTC/USD fell over 3%.

Friday’s Performance In US Major Indices, ETFs

Major Indices	Price	1-day Chg %
Dow Jones	39,492.36	-2.1%
S&P 500	5,321.21	-2.3%
Nasdaq 100	18,355.31	-2.8%
Russell 2000	2,110.14	-3.4%

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust SPY was 2.2% lower to $531.13.
• The SPDR Dow Jones Industrial Average DIA fell 1.9% to $395.39.
• The tech-heavy Invesco QQQ Trust Series QQQ fell 2.6% to $447.80.
• The iShares Russell 2000 ETF IWM fell 3.5% to $208.99.
• Sector-wise, the Consumer Staples Select Sector SPDR Fund XLP outperformed, up 0.1%, while the Technology Select Sector SPDR Fund XLK tumbled by 3.4%.

Friday’s Stock Movers

Stocks reacting to earnings reports were:

• Amazon, Inc. AMZN down nearly 10%.
• Apple, Inc. up by 2.9%
• Block, Inc. SQ up 0.5%,
• Booking Holdings Inc. BKNG down about 8%,
• Chevron Corp. CVX down 3.2%,
• Cloudflare, Inc. NET up over 7%,
• Coinbase Global Inc. down 2.8%,
• DraftKings Inc. down over 9%,
• EOG Resources Inc. EOG down 1.9%,
• Exxon Mobil Corp. XOM, down 0.6%,
• Intel Corporation, down nearly 28%,
• MercadoLibre Inc. MELI up 11%,
• Microchip Technology Incorporated MCHP down over 8%,
• Opendoor Technologies Inc. (NASDAQ: OPEN down about 10%,
• Twilio Inc. TWLO up over 10%.
• Vertex Pharmaceuticals Inc. VRTX down 2%.

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Image created using artificial intelligence via Midjourney.