The European stock market experienced a significant decline for the second consecutive day, with the Stoxx 600 index dropping 1.3% by 9:02 a.m. in London.

This decline was largely driven by concerns over tech earnings and broader economic growth, intensifying a global selloff ahead of key U.S. jobs data.

Tech Sector Leads the Decline

The technology sector was at the forefront of the market drop. Semiconductor stocks were particularly hard hit, following Intel Corp.’s announcement of plans to reduce capital expenditure. ASM International NV saw its shares fall by 7.8%, while ASML Holding NV tumbled 5.3%.

The sector’s struggles reflect broader worries about the sustainability of tech earnings and the potential impact of reduced investments in the industry.

Banks Among the Worst Performers

Banking stocks also suffered significant losses, with the sector heading for its second-largest weekly drop of the year. Swiss stocks were notably affected as trading resumed following a local holiday. UBS Group AG’s shares fell by 5.3%, contributing to the overall negative sentiment.

Mixed Earnings Reports

Despite the broader market decline, there were pockets of positive news. IAG SA, the airline operator, saw its shares rally after reporting second-quarter earnings that beat estimates and announcing the abandonment of a plan to buy a Spanish airline.

Similarly, Axa SA’s shares rose following an underlying profit that exceeded expectations and the announcement of its asset management unit’s sale to BNP Paribas SA.

Awaiting U.S. Jobs Data

Investors are closely watching for the U.S. monthly jobs data, with economists predicting a slowdown in job and wage growth for July. This data follows a report showing that U.S. manufacturing activity shrank in July by the most in eight months, raising concerns about the health of the economy.

Federal Reserve officials have indicated that they may cut rates in September unless there is a significant improvement in inflation.

Market Commentary

Guillermo Hernandez Sampere, head of trading at asset manager MPPM, noted, “When yields and stocks fall together, macrofunds are usually behind them.

The Fed’s statements were used as an opportunity to price in the changed expectations. There are signs of a slowdown in the economy, but a hard landing probably should not occur.”

Sector-Specific Impacts

The European banking sector is expected to remain in focus following the late Thursday selloff. Traders are pointing to a combination of declining central bank interest rates and slowing economic activity as key factors.

Also, the semiconductor sector may continue to face pressure due to the extended slump among global tech stocks and Intel’s capital expenditure plans.

Looking Ahead

As the market braces for the release of U.S. jobs data, the Stoxx 600 is on track for a weekly decline, heading into what is typically the weakest season of the year.

Historically, August and September have been the worst months for the index. The broader market will be watching closely to see if the jobs data can provide any relief or further exacerbate the current selloff.

In the meantime, European stocks continue to grapple with the dual pressures of tech sector weakness and broader economic concerns, setting a cautious tone for investors moving forward.