U.S. stocks took a significant hit on Monday as concerns about the state of the U.S. economy intensified. The Dow Jones Industrial Average (^DJI) dropped nearly 900 points, while the tech-heavy Nasdaq Composite (^IXIC) declined by about 3% following steep losses last Friday. The S&P 500 (^GSPC) also fell by approximately 2.5%.
The CBOE Volatility Index (^VIX), often referred to as Wall Street’s “fear gauge,” surged to its highest level since the onset of the COVID-19 pandemic in March 2020. Treasury yields decreased, with the 10-year Treasury note (^TNX) yield nearing 3.8%.
Global stock markets experienced sharp sell-offs after Friday’s underwhelming U.S. jobs report, which heightened concerns about the economy and whether the Federal Reserve has delayed interest rate cuts for too long. According to the CME FedWatch Tool, nearly 100% of traders anticipate a 0.5% rate cut by the central bank at its September meeting.
Several major companies faced significant losses at the market’s opening. Apple (AAPL) dropped 4% amid the sell-off and news that Berkshire Hathaway (BRK-B) had halved its stake in the company. Nvidia (NVDA) continued its downward trend, initially falling 13% before recovering some losses, while Tesla (TSLA) declined more than 3%.
Cryptocurrencies also suffered, with Bitcoin (BTC-USD) dropping over 8% and approaching the $54,000 level.
The impact was felt worldwide. Asian markets began the week with similar declines, with Japan’s Nikkei 225 (^N225) plummeting more than 12%—its largest daily loss on record—following the Bank of Japan’s unexpected interest rate hike last week.
A sharp rise in the yen against the U.S. dollar triggered heavy selling as speculators who had borrowed at Japan’s near-zero interest rates to invest in riskier U.S. assets liquidated their positions.
The U.S. market is poised for a quieter week in terms of data and earnings, but attention remains focused on the labor market. The weekly jobless claims report due on Thursday will be closely watched.
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