Wall Street plunged at the opening on Mondaywith 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 United States that appears to have spread to other international markets today.
Five minutes after the bell rang, 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, was down 195 points (-3.66%).
Volatility is now at levels not seen since the stock market crashes of March 2020, linked to the declaration of the Covid-19 pandemic, due to fears that the US Federal Reserve (Fed) will announce the expected rate cut too late, according to analysts.
The Vix index, known as the “fear gauge” and which measures volatility, soared by 100%.
Among the sectors that were hit hardest by far was the technology sector (-5%), with a notable drop of Nvidia (-10%), a leading chip manufacturer in artificial intelligence (AI) that has had a buoyant performance in recent months.
Following last week’s global declines, Today, Japan’s Nikkei fell by 12.40%its second biggest fall in history, following a recent rate hike in Japan, while in Europe, the major stock markets had accumulated losses of around 2% shortly before closing.
The Fed on Wednesday kept its high interest rate environment unchanged and suggested that That rate cut would soon comebut weak labor market and industrial activity data released on Thursday and Friday made investors nervous.
The July U.S. jobs report showed job creation slowed to a lower-than-estimated 114,000 and the unemployment rate rose to 4.25 percent, a figure that approximates a recession 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 “could have waited too long to cut rates and that The economy could face a “hard landing”which involves a process of deceleration 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.
In other asset markets, Texas oil began trading at around $72 a barrelerasing virtually all of the year’s gains as concerns about demand in China compounded the potential recession in the U.S.
Bitcoin, the leading cryptocurrency, fell 11% to around $51,750.
As for safe-haven assets, the yield on the 10-year US Treasury bond fell to 3.64% due to demand, but gold, which is also often included in this category, fell to $2,430 an ounce.
With information from EFE.
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