Wall Street is falling as fears of a US recession shake the world; Apple falls 4%
Wall Street’s main indexes fell on Monday as fears of a US recession after weak economic data last week weighed on global markets.
Stocks from Asia to Europe slipped and bond yields slid as investors rushed to safe-haven assets and bet the US Federal Reserve would now need to cut interest rates sharply to spur growth. .
The selloff was brutal, with the so-called Magnificent Seven group of stocks – the main driver of the indexes hitting record highs earlier this year – set to lose $1 trillion in value ‘ market.
Apple fell 4.6% behind Berkshire Hathaway
has reduced its stake in the iPhone maker, suggesting that billionaire investor Warren Buffett is paying attention to the broader US economy or the stock market’s already high valuations.
Nvidia fell 5.6% after reports of delays in the launch of its upcoming artificial intelligence chips due to design flaws. Microsoft and Alphabet are down about 3% each.
At 10:04 a.m., the Dow Jones Industrial Average was down 860.39 points, or 2.18%, at 38,870.14, the S&P 500 was down 133.97 points, or 2.51%, at 5,212.59 and the Nasdaq Composite was down is 1,5,5 or 520.
A weak jobs report and slowing activity in the world’s largest economies, as well as disappointing forecasts for major US technology firms, pushed the Nasdaq 100 and Nasdaq Composite into corrections last week.
The disappointing jobs data also led to what is known as the “Sahm Rule”, which is seen by many as a historically accurate indicator of the recession.
Traders now see an 88% chance that the US central bank will cut rates by 50 basis points in September, compared with an 11% chance seen last week, according to CME’s FedWatch Tool.
“I don’t think the Fed will take 50 basis points because at the same time it would suggest that the Fed was wrong, that the recession is right and it can do more adding to investor tension rather than calming nerves,” said Sam Stovall, chief investment strategist at CFRA Research.
Chicago Fed President Austan Goolsbee downplayed fears of a recession but said Fed officials should pay attention to changes in the environment to avoid being too restrictive on interest rates.
The CBOE Volatility index, also known as the “fear gauge” of Wall Street, broke its long-term level of 20 points last week and was currently at 40.63.
US Treasury yields fell to their lowest in a year and a closely watched gap between the two- and 10-year Treasury notes.
it turned positive for the first time since July 2022, usually indicating that the US economy will collapse.
U.S. services sector activity rebounded from a four-year slump in July amid an increase in orders and jobs.
All 11 major S&P 500 stocks were trading lower, with information technology and consumer discretionary having the worst impact.
Decliners outnumbered advancers by a ratio of 13.06-to-1 on the NYSE and by a ratio of 11.8-to-1 on the Nasdaq.
The S&P 500 posted 13 new 52-week highs and 23 new lows while the Nasdaq Composite recorded 6 new highs and 438 new lows.
Pringles maker Kellanova rose 14.8% after a Reuters report said candy giant Mars was looking to buy the company.
First Published: Aug 05 2024 | 8:17 PM IS
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