Fears surrounding a potential slowdown in the U.S. economy intensified on Thursday, as reports emerged of companies shedding jobs and implementing hiring freezes. This prompted Wall Street to experience significant declines, with the S&P 500 index falling by 1%, while the tech-heavy Nasdaq Composite suffered a steeper drop of 1.5%.
A particularly alarming report highlighted that October was the worst month for layoffs in the U.S. since 2003, raising investor concerns amid an environment of limited official data due to a federal government shutdown. According to global outplacement firm Challenger, Gray & Christmas, many employers have not only reduced their workforce but also paused hiring activity altogether.
Chris Beauchamp, chief market analyst at IG.com, emphasized the impact of the shutdown, stating that “the lack of U.S. data” is fostering unease among investors. The ongoing review of former President Donald Trump’s tariffs by the Supreme Court has added further anxiety, with potential implications for his administration’s flagship economic policies.
The absence of timely economic indicators has severely hindered the Federal Reserve’s ability to assess the U.S. economy accurately. Beauchamp noted that both the Fed and financial markets find themselves operating “in the dark” due to the suspension of key inflation and employment data. Fed board member Austan Goolsbee expressed his caution regarding interest rate cuts, stating that the current lack of official inflation data only amplifies his wariness.
In terms of job statistics, the Challenger report revealed a staggering 153,074 job cuts announced in October 2024, a sharp increase from the 55,597 layoffs reported during the same month in 2023. Overall, U.S. firms have announced the loss of approximately 1.09 million jobs in the first ten months of this year, marking a 44% increase from 761,358 cuts in the corresponding period of 2023. Technology sectors continue to lead the wave of layoffs, further contributing to market unease.
The downturn was not limited to U.S. markets; the FTSE 100 dropped by 41 points, or 0.4%, while European stocks also faced declines. The Stoxx Europe 600 closed down 0.7%, with technology stocks leading the losses, and Germany’s DAX index fell by 1.3%.
Regarding the tariffs, Beauchamp explained that should the Supreme Court decide to roll back any of them, this could ease inflationary pressures, though such resolutions are not expected to materialize for some time. The current economic landscape continues to prompt critical evaluations and portrays a cautious sentiment as both investors and policymakers navigate these challenges.
