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US labor growth misses expectations; unemployment rate

rises

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Bets up on a half-percentage-point Fed rate cut in

September

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Chevron ( CVX ) down after Q2 profit miss

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Indexes down: Dow 1.14%, S&P 1.52%, Nasdaq 2.36%

(Updated at 9:55 a.m. ET/1355 GMT)

By Ankika Biswas and Shubham Batra

Aug 2 (Reuters) - The Nasdaq Composite was set to plunge

into a correction on Friday, falling more than 10% from its July

peak after weak employment numbers aggravated worries of a

slowdown in the U.S. economy, while Amazon ( AMZN ) and Intel's ( INTC ) downbeat

forecasts dampened sentiment.

The S&P 500 hit its lowest level since July 11 and

the Dow was on track for its biggest two-day percentage

fall since early March 2023.

A Labor Department report showed nonfarm payrolls rose by

114,000 jobs in July, sharply lower than the 175,000 additions

estimated by economists polled by Reuters. The unemployment rate

ticked higher, to 4.3%, from 4.1% a month ago.

With fresh evidence of a weakening labor market, traders are

now betting the U.S. Federal Reserve will deliver a big

half-percentage-point rate cut in September, versus the 25-bps

cut expected before the data.

"Now the question isn't will they cut in September, but by

how much. With the Sahm rule (a recession gauge) officially

being triggered, both the talk of recession and criticism of the

Fed will grow louder," said Jay Woods, chief global strategist,

Freedom Capital Markets.

At 9:55 a.m. ET, the Dow Jones Industrial Average was

down 458.84 points, or 1.14%, at 39,889.13, the S&P 500

was down 82.67 points, or 1.52%, at 5,364.01, and the Nasdaq

Composite was down 405.96 points, or 2.36%, at

16,788.19.

Amazon.com ( AMZN ) slumped 11.7% after the company reported

slowing online sales growth in the second quarter and said

cautious consumers were seeking cheaper purchase options.

Intel ( INTC ) tumbled 26.7% after forecasting third-quarter

revenue below estimates and suspending its dividend, starting in

the fourth quarter.

Other chip stocks were also set to extend Thursday's

losses. Nvidia ( NVDA ) fell 4.4%, Broadcom ( AVGO ) lost 3.3%,

Micron Technology ( MU ) shed 5.7% and Arm Holdings was

down 6.3%.

The Philadelphia SE Semiconductor Index hit a

three-month low, falling 4.5%.

Apple ( AAPL ) inched 2.3% higher as it posted

better-than-expected third-quarter iPhone sales and forecast

more gains, betting on AI to attract buyers.

Eight of the 11 S&P 500 sub-indexes fell, with the Consumer

Discretionary sector leading the losses and on track

for its biggest one-day drop since Sept. 13, 2022.

Other megacaps such as Microsoft ( MSFT ) and Alphabet

shed around 2% each. Meta also dropped,

losing 1.0% after soaring on Thursday after upbeat results.

Concerns about the dominance of the "Magnificent Seven"

group of stocks persist as earnings from most of these Big Tech

companies have failed to enthuse investors, underlining fears of

their valuations being inflated.

Wall Street's "fear gauge" breached the long-term

average level of 20 points to touch its highest mark since last

October.

The Russell 2000 small-cap index was down 3.3%,

hitting a three-week low, and was also set for its biggest

two-day percentage drop since June 2022.

Among other movers, Snap lost 22.8% after

forecasting current-quarter results below expectations.

Chevron Corp ( CVX ) slipped 1.6% after the oil giant missed

estimates for second-quarter profit, hurt by weak refining

margins.

Declining issues outnumbered advancers for a 3.04-to-1 ratio

on the NYSE, and by a 5.28-to-1 ratio on the Nasdaq.

The S&P index recorded 55 new 52-week highs and 11 new lows,

while the Nasdaq recorded 22 new highs and 172 new lows.