Payrolls, slumping stocks, Apple, Amazon - what's moving markets

Investing.com -- Wall Street looks set to end the week on a losing note as weak activity data has investors fretting about the possibility of a U.S. recession. Nonfarm payrolls will be studied for growth clues, while results from tech heavyweights Apple and Amazon will also be in the spotlight. 

1. Payrolls loom large

Friday’s economic highlight will be the release of the closely watched nonfarm payrolls report, as investors seek further clues on the health of the U.S. labor market and the broader economy.

Economists are expecting the U.S. economy to have created 177,000 jobs in July, moderating from 206,000 in the prior month.

The unemployment rate, which has ticked higher in each of the past three months, is expected to hold steady at 4.1%.

The Federal Reserve kept its benchmark overnight interest rate in the 5.25%-5.50% range on Wednesday, where it has been since last July, but also opened the door to reducing borrowing costs as soon as its next meeting in September. 

In the accompanying statement the Fed softened the description of inflation and said the risks to employment were now on a par with those of rising prices.

Data released earlier this week showed that U.S. job openings fell modestly in June, while new applications for unemployment benefits increased to an 11-month high last week.  

A weak U.S. ISM manufacturing report also added to fears of an economic downturn and led investors to worry that the Federal Reserve may be behind the curve in cutting rates.

2. Futures fall on recession fears

U.S. stock futures fell Friday, as investors digested some disappointing earnings from the important tech sector while awaiting the release of the widely-watched monthly nonfarm payrolls report. 

By 04:10 ET (08:10 GMT), the Dow futures contract was 225 points, or 0.5%, lower, S&P 500 futures dropped 48 points, or 0.9%, and Nasdaq 100 futures fell by 295 points, or 1.6%.

The Wall Street indices closed sharply lower Thursday after a softer-than-expected ISM report on U.S. manufacturing caused investors to fret about a possible recession.

The S&P 500 dropped 1.4%, the Nasdaq Composite fell 2.3% and the Dow Jones Industrial Average slumped almost 500 points, or 1.2%.

Investors will be focusing upon the official jobs report [see above] for more clues of the strength of the U.S. labor market, with risk sentiment ending the week on the back foot.  

Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) released their earnings after the close Thursday [see below] and will be in the spotlight, as will Intel (NASDAQ:INTC) after the chipmaker said it would cut more than 15% of its workforce and suspend its dividend starting in the fourth quarter as it pursues a turnaround.

Staying on the earnings front, oil majors Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM) will be announcing their quarterly results Friday before the market open.

3. Apple impresses despite Chinese woes

Apple reported Thursday third-quarter results that topped Wall Street estimates, as a jump in services revenue helped offset softer iPhone revenue amid rising competition in China. 

The tech giant’s stock rose 0.6% after hours, adding to gains of nearly 30% in the past three months, resulting in gains of around 13% over the course of this year.

Apple said revenue in its fiscal fourth quarter would grow at a level similar to the 4.9% increase it posted in the April-June period, which was better than expectations.

Services revenue rose 14% to record high of $24.21 billion, beating Wall Street estimates of $24.01 billion.  

Sales of iPhone also improved in the third quarter, falling just 0.9% compared with the 2.2% drop analysts expected, although China - Apple's third-largest market - remained a drag as sales there declined 6.5%. 

Apple has taken to discounting its iPhones in China to compete with the much cheaper alternative smartphones offered by local competitors such as Huawei.

Despite these difficulties, things could get better next quarter, as analysts expect a strong upgrade cycle for the iPhone 16 series, likely to be launched in September. 

The company unveiled a raft of AI products and services it calls Apple Intelligence at its developer conference in June, and to operate Apple Intelligence requires at least an iPhone 15 Pro, which may push consumers to upgrade their devices.

4. Amazon reports slowing online sales growth

Amazon stock slumped after hours after the online retail giant reported slowing online sales growth in the second quarter, adding that price-conscious consumers were acting cautiously.

Amazon’s online stores sales rose 5% in the second quarter to $55.4 billion, compared with growth of 7% in the first quarter.

Additionally, the company offered up third-quarter revenue guidance of $154-158.5 billion, short of expectations of $158.2 billion. 

CFO Brian Olsavsky told reporters on a call that consumers "are continuing to be cautious with their spending trading down."

"They are looking for deals," he added, noting that lower priced products were selling briskly. 

This news has overshadowed generally positive results, with second-quarter profit and cloud computing sales beating analyst estimates. 

Amazon stock fell almost 7% after hours, but were still up over 20% year-to-date.

5. Crude on track for fourth straight losing week

Crude prices rose Friday, but were on course for a fourth straight week of losses given mounting concerns over slowing economic growth.

By 04:10 ET, the U.S. crude futures (WTI) climbed 1.1% to $77.18 a barrel, while the Brent contract rose 1% to $80.32 a barrel.

Both benchmarks have declined around 8% over the last four weeks as disappointing economic data from top oil importer China and surveys showing weaker manufacturing activity across Asia, Europe and the United States raised concerns of weak global economic growth, weighing on oil consumption.

The weak economic prints saw markets largely look past heightened tensions in the Middle East after the killing of a Hamas leader in Iran earlier in the week. 

The Organization of Petroleum Exporting Countries and allies, known as OPEC+, made no changes to its production policies after an online meeting on Thursday, reiterating that it could pause plans to increase output from October.