Wall Street The stock market plunged at the opening on Monday, with falls of more than 1,000 points in two of its main indicators, the Dow Jones Industrial Average and the Nasdaq, due to fears of a recession in the US, which appears to have spread to other international markets today.
Five minutes after the bell, the Dow Jones increased its losses to 1,152 points (-2.90%) and the Nasdaq moderated them to 810 points (-4.83%), while the S&P 500, which represents the US market more broadly, cut 195 points (-3.66%).
According to analysts, volatility is now reaching levels not seen since the stock market crashes of March 2020, linked to the declaration of the Covid-19 pandemic, due to fear that the US Federal Reserve (Fed) will dictate the expected rate cut too late.
The Vix index, known as the “fear gauge” and which measures volatility, soared by 100%.
Among the sectors that suffered the most was, by far, the technology sector (-5%), with a notable drop of Nvidia (-10%), a leading chip manufacturer in artificial intelligence (AI) that has had a buoyant trajectory in recent months.
Following last week’s global falls, Japan’s Nikkei today plunged 12.40%, its second-biggest fall in history, following a recent rate hike in Japan, while in Europe, the major stock markets were accumulating losses of around 2% shortly before closing.
The Fed kept its high-interest-rate environment unchanged on Wednesday and suggested a rate cut was coming soon, but weak labor market and industrial activity data on Thursday and Friday left investors nervous.
The US July jobs report showed job creation slowed to a lower-than-estimated 114,000 and the unemployment rate rose to 4.25%, which is close to a recessionary indicator known as the “Sahm rule,” which compares the average unemployment rate over the past three months with that of the past 12.
Market analyst Manuel Pinto said the data raised fears among investors that the Fed “may have waited too long to cut rates and that the economy could face a ‘hard landing,’ which is a slowdown or recession after a period of rapid growth.”
Tiffany Wilding, an analyst at PIMCO, said the economy “has not collapsed yet” and called for continuing to “look for clues.” “The next employment report and the recovery from the weakness of July will be key in setting the tone for the Fed’s September meeting,” she said in a note.
Elsewhere in the asset markets, Texas crude oil began trading at around $72 a barrel, erasing virtually all of the year’s gains as concerns about demand in China added to the potential recession in the US.
Bitcoin, the leading cryptocurrency, fell 11% to around $51,750.
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2024-08-09 01:25:12
