Wall Street experienced a significant downturn on Thursday, driven by mounting fears of an economic slowdown and a severe lack of official government data.
Market Plunge and Layoff Alarm
The S&P 500 index fell by 1%, while the technology-focused Nasdaq Composite saw a steeper decline of 1.5%. The sell-off was triggered by a stark report from global outplacement firm Challenger, Gray & Christmas, which revealed that October witnessed the highest number of US layoffs for that month since 2003.
According to the report, employers announced 153,074 job cuts last month, a dramatic increase from the 55,597 cuts announced in October of the previous year. In the first ten months of this year alone, US firms have announced the termination of 1.09 million roles, a 44% surge compared to the same period in the prior year. The technology sector was noted as a leading contributor to these private-sector layoffs.
Investors Left in the Dark
Compounding the anxiety was the ongoing federal government shutdown, which has suspended the publication of key official data on inflation and employment. This has created a major information vacuum for investors and policymakers alike.
Chris Beauchamp, chief market analyst at IG.com, stated, "The lack of US data and the ongoing government shutdown is making investors nervous." He added that both the Federal Reserve and financial markets have found themselves "groping around in the dark" without this critical information.
The data blackout has forced the Fed to judge the state of the US economy with only a fraction of its usual intelligence. Fed board member Austan Goolsbee emphasised this caution on CNBC, saying the lack of inflation data "accentuated his caution about cutting interest rates further." He analogised the situation to navigating in fog, suggesting a need to be careful and slow down.
Supreme Court Adds to the Jitters
Further rattling the markets was the news that the US Supreme Court has begun a review of former President Donald Trump's tariffs. The outcome of this review could potentially force the abandonment of this flagship trade policy.
Beauchamp commented on the potential implications, noting, "If the supreme court rolls back some of the tariffs then inflationary worries will subside to an extent, though this is a topic that will not come to fruition for weeks."
The negative sentiment spread across the Atlantic, with London's FTSE 100 falling 41 points, or 0.4%. European markets also closed lower, with the Stoxx Europe 600 down 0.7% and Germany's Dax falling 1.3%.
