01:45 PM EDT, 08/02/2024 (MT Newswires) -- US equity indexes plunged after midday Friday as bets for a 50 basis-point cut in interest rates in September more than tripled after a substantial miss in July's nonfarm payrolls sent government bond yields into a nosedive.

The Nasdaq plummeted 2.8% to 16,708.8, due partly to Intel's ( INTC ) disappointing quarterly results knocking out the technology bulls. Meanwhile, the S&P 500 sank 2.4% to 5,318.5 and the Dow Jones Industrial Average slid 2.1% to 39,489.4. All sectors except for consumer staples, were lower intraday, with consumer discretionary and energy pulling back the most.

The CBOE's Volatility Index (VIX), known as the fear gauge in market parlance, surged more than 40% to 26.04, scaling a 52-week high.

In economic news, nonfarm payrolls expanded 114,000 last month, the Bureau of Labor Statistics said. The consensus was for a 175,000 gain in a survey compiled by Bloomberg. Job gains were revised downward by 27,000 for June and 2,000 for May. The unemployment rate increased to 4.3%, as anticipated, from 4.1% in June.

"The large miss in July nonfarm payrolls and jump in the unemployment rate underlines what we have been seeing in the overall US economic data for some time now that aggregate demand is softening rapidly," BMO Chief US Economist Scott Anderson wrote in a note.

Average hourly earnings grew 0.2% sequentially and 3.6% from a year ago, lagging Wall Street's views for an increase of 0.3% and 3.7%, respectively.

Treasury yields plunged, with the 10-year down 16.3 basis points to 3.81% and the two-year rate cratering 25 basis points to 3.91%, as sharply weakening economic data hit the risk sentiment.

"While the data in coming months will shape the [monetary] policy trajectory, labor market softening suggests an increased probability that the Fed may cut at successive meetings through year-end," Macquarie said in a note. According to the CME Group's FedWatch Tool, the probability of a 50 basis point cut in interest rates shot up to 76% by Friday afternoon from 22% the previous day.

In company news, Intel ( INTC ) shares slumped 27% intraday, the worst performer on the S&P 500, the Nasdaq, and the Dow, after the chipmaker reported late Thursday a drop in Q2 earnings and sales. The company announced plans to suspend dividends starting Q4 while implementing a $10 billion cost-cutting program that will include a headcount reduction of more than 15%.

Amazon.com ( AMZN ) , another heavyweight, was also among the laggards on the three indexes, down 10% intraday, after quarterly sales reported the day before trailed analysts' estimates and multiple brokerages cut their price targets.

Apple ( AAPL ) reported better-than-expected fiscal Q3 results as gains in iPad and Mac sales more than offset a decline in its flagship iPhone product. Shares rose nearly 3% intraday, among the top gainers on the Dow and the Nasdaq.

Technology slumped 2.4% intraday as all but two mega-caps -- defined as a market capitalization of more than $200 billion -- in the sector traded lower.

West Texas Intermediate crude oil retreated 4% to $73.24 a barrel, its lowest since early June.

Gold fell 0.4% to $2,470.82 an ounce, and silver declined 0.3% to $28.39.