The Morning: Stock market chaos

Plus, Google's antitrust case, the Democratic veepstakes and Tropical Storm Debby.

View in browser|nytimes.com August 6, 2024 Good morning. We're covering the stock market chaos around the world — as well as Google's antitrust case, the Democratic veepstakes and Tropical Storm Debby. In New York. Ava Pellor for The New York Times A cooling job market By Ben Casselman I cover the economy with a focus on the labor market. Yesterday was the worst day for U.S. stocks in nearly two years. Markets around the globe fell sharply; the S&P 500 index was down 3 percent. Stock markets are fickle, and their movements can't tell you much about the health of the economy. Today, the S&P 500 could fall another 3 percent — or it could erase yesterday's losses. But yesterday's tumult reflects an underlying reality: The job market is cooling. That cool-down was expected, even necessary, after a wild four years: The early pandemic brought astonishing job losses, followed by a frenetic recovery. Now, the unemployment rate, at 4.3 percent, is basically back to normal. But some recent data has alarmed economists, and it helped spark yesterday's sell-off. In today's newsletter, I'll explain. The wild ride Nearly 22 million workers lost their jobs after Covid struck. By April 2020, the unemployment rate — which had been at a five-decade low of 3.5 percent — jumped to nearly 15 percent. Businesses thought many of those layoffs would be temporary. They expected to reopen quickly and bring workers back. Instead, the pandemic dragged on. By the time vaccines became widely available in early 2021, many businesses found that the employees they had let go were no longer available. Some had found other jobs, changed industries or started businesses of their own. Some didn't yet feel safe returning to work or couldn't find child care. Some had retired or returned to their home countries. Some had been killed or disabled by Covid. The result was a scramble to hire from a limited pool of workers. There were soon two available jobs for every available worker. Source: Bureau of Labor Statistics, via Federal Reserve Bank of St. Louis |Notes: Data is seasonally adjusted | By The New York Times That gave workers tremendous leverage. Especially in the service sector, they jumped between jobs in search of better pay and working conditions. Wages soared, with the lowest-paid workers winning the fastest gains — a reversal of the longstanding trend of rising inequality. Over time, though, supply and demand came into better balance. More Americans returned to work, joined by an influx of immigrants. Job openings are now back roughly to where they were before the pandemic. Wage growth and job turnover have both slowed. Source: Bureau of Labor Statistics, via Federal Reserve Bank of St. Louis | Notes: Data is seasonally adjusted and it is not adjusted for inflation | By The New York Times A reset, not a slowdown A cooling labor market might sound like a bad thing — and in most circumstances, it is. But the labor market of late 2021 and early 2022 was perhaps too hot. Businesses raised pay and still couldn't find the workers they needed, leaving customers frustrated with poor service and long waits. Workers complained that, for all their supposed leverage, staffing shortages left them exhausted and burned out. The hot labor market also posed a problem for the Federal Reserve, which has been trying to bring down inflation. Wage growth didn't cause the initial surge in prices. But if businesses kept seeing their labor costs rise, they were likely to keep raising prices, too. So the recent cool-down has been something of a relief. Even better, it has happened with hardly any increase in job losses. That is remarkable because job openings and unemployment usually move in opposite directions: When demand slows, companies post fewer jobs and lay off employees. Many economists expected the same this time around. They were wrong. This time, openings fell — not because companies needed fewer workers but because there were finally enough workers to fill positions that had been sitting open, in some cases for years. Wages stopped rising as quickly, but so did prices, which meant workers were in many cases better off than at the height of the boom. Jerome Powell, the Fed chair. Andrew Harnik/Getty Images What comes next That has been the story: a surprisingly painless return to normal. But job data released on Friday offered a warning: The unemployment rate rose to 4.3 percent — still quite low, but the highest in more than two and a half years. Layoffs haven't yet picked up, but workers who do lose their jobs are having a harder time finding new ones. That risk is part of the reason that Fed officials are likely to begin cutting interest rates soon. (In a story The Times published this morning, I weigh the likelihood of a recession.) The prepandemic labor market was the best in at least a generation, with low unemployment, strong earnings growth and declining wage inequality. We could still get back there. But the latest jobs numbers suggest there is now little if any room for the labor market to cool further without causing pain for workers. For more Stocks in Asia rebounded today as investors reclaimed a measure of calm. Donald Trump seized on the market news to attack Vice President Kamala Harris. The Fed is unlikely to lower interest rates before its meeting in September, Jeanna Smialek writes. THE LATEST NEWS Google Case Sundar Pichai, the Google C.E.O.  Jason Henry for The New York Times Google lost a major antitrust case. The judge, who ruled that Google illegally maintained a monopoly in search, could now force it to sell parts of its business. The decision, much like one against Microsoft in 2000, will likely shape new rules for the tech industry. Read how. More on Business Regulators around the world are scrutinizing Nvidia, which holds more than 90 percent of the A.I. chip market. The company is racing to respond. A South Korean chip company will build a factory in Indiana with help from Biden administration grants. X plans to shut its San Francisco office. Elon Musk has said he wants to move the company's headquarters to Texas. 2024 Election Harris plans to announce her running mate this morning. The two will campaign in Philadelphia tonight. Adin Ross, a 23-year-old influencer, interviewed Trump and gave him a Tesla Cybertruck decorated with a photo of him after the assassination attempt. A 100-day sprint to Election Day seems to be benefiting Harris. It's thrown Trump off balance and given the media less time to scrutinize her. More on Politics Records show that Justice Clarence Thomas failed to disclose more flights on a conservative donor's private jet, a Senate Democrat revealed. The Supreme Court rejected a lawsuit that sought to delay Trump's sentencing in his Manhattan hush-money case until after the election. Kansas, Michigan, Missouri and Washington have congressional primaries today. Cori Bush, a House progressive, faces a serious challenge from a more mainstream Democrat. Tropical Storm Debby In Steinhatchee, Florida. Dustin Chambers for The New York Times Debby arrived on Florida's Gulf Coast as a Category 1 hurricane. At least five people died. "All of my children's baby books got flooded": A couple in a tiny fishing town in Florida reckoned with the destruction. Forecasters expect the storm to pass over Georgia and out to sea, before returning to the coast on Thursday. See the track. Partly because it's moving slowly, the storm is expected to bring historic rain to the southeast, with flood warnings in Georgia and the Carolinas. More International News In Toretsk, Ukraine. Tyler Hicks/The New York Times Ukraine and Russia are fighting for Toretsk, a city in the east where Ukrainian defenses had long held. A rocket attack targeting a base in Iraq wounded several American service members. Iranian-backed groups in Iraq have launched similar attacks in the past. Sheikh Hasina, the Bangladeshi prime minister who fled yesterday, was brought down by years of repressive rule, Mujib Mashal writes. A rebel army battling Myanmar's junta seized a military headquarters near the border with China. The U.S. handed control of its last military base in Niger to local forces, ending a yearslong counterterrorism mission. Other Big Stories In Lahaina, Hawaii.  Philip Cheung for The New York Times Community leaders in Hawaii want to rebuild the town of Lahaina after the wildfires on Maui last year. First they must decide how to preserve its history. A fast-moving brush fire in the California city of San Bernardino destroyed homes and forced evacuations. Two hundred firefighters are battling the blaze. Opinions Kentaro Takahashi for The New York Times Before the world engages on a course to repeat the horror of the Hiroshima and Nagasaki bombs, it should listen to the few remaining survivors, Kathleen Kingsbury, W.J. Hennigan and Spencer Cohen write. Here are columns by Paul Krugman on recession risks and Michelle Goldberg on a book that JD Vance endorsed. Subscribe Today The Morning highlights a small portion of the journalism that The New York Times offers. To access all of it, become a subscriber with this introductory offer. MORNING READS In São Paulo, Brazil. Larissa Zaidan Not-so-solo geniuses: See the big teams it takes to make a new thing, whether it's a woven chair or a leather handbag. "Step gap": Adult children are less likely to help an aging stepparent than a parent, studies show. Experts are worried. Natural gas or renewables? The way America produces power has shifted a lot over the past few years. See how your state has changed. Health: Worried your manicure might damage your nails? Here are signs you need to take a break. Lives Lived: Barbara Howar was a gleefully nonconformist fixture of the Washington social scene when her uninhibited 1973 memoir, "Laughing All the Way," made her a star and set her on a path to a career in television. She died at 89. OLYMPICS Women's gymnastics: Simone Biles earned a silver medal in what could be her final Olympic competition. Surfing: America's Caroline Marks won gold in Tahiti, becoming the second U.S. woman to win top honors in the relatively new event. Celebrity: The rapper Snoop Dogg — who has carried the Olympic torch, danced with Biles and swam with Michael Phelps — is a star of the Games, The A.P. reports. Perseverance: Ukraine has collected medals in Paris, but at home its sports pipeline is in ruins. ARTS AND IDEAS Influencers at an event for "The Great Gatsby." Ye Fan for The New York Times Broadway shows still sell fewer tickets than they did before the pandemic. To attract new fans — in particular, younger and more diverse ones — show are turning to influencers on TikTok and Instagram. Theater content creators tend to have smaller followings than food or beauty accounts, but their reach is more targeted. The strategy seems to be paying off: "The Great Gatsby," a new show this season, saw traffic to its website increase notably in the two weeks after it began a collaboration with theater influencers. More on culture The director David Lynch said that he had emphysema and would only be able to direct remotely. The writer of "M. Butterfly," David Henry Hwang, is working on a Broadway musical about particle physics. THE MORNING RECOMMENDS … Christopher Testani for The New York Times. Make adobo, a perfectly salty, sweet and tangy Filipino chicken dish. Make great pizza at home. Write with the best pen. GAMES Here is today's Spelling Bee. Yesterday's pangram was competed. And here are today's Mini Crossword, Wordle, Sudoku, Connections and Strands. Thanks for spending part of your morning with The Times. See you tomorrow. Sign up here to get this newsletter in your inbox. Reach our team at themorning@nytimes.com. Editor: David Leonhardt Deputy Editor: Adam B. Kushner News Editor: Tom Wright-Piersanti Associate Editor: Lauren Jackson News Staff: Desiree Ibekwe, Sean Kawasaki-Culligan, Brent Lewis, German Lopez, Ian Prasad Philbrick, Ashley Wu News Assistant: Lyna Bentahar Saturday Writer: Melissa Kirsch Need help? Review our newsletter help page or contact us for assistance. You received this email because you signed up for the Morning newsletter from The New York Times, or as part of your New York Times account. To stop receiving The Morning, unsubscribe. 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