2024-08-05 23:09:39
O Dow fell 1,033.99 points or 2.6% to close at 38,703.27. THE Nasdaq lost 3.43% to end at 16,200.08 points, while S&P 500 recorded losses of 3% to 5,186.33 points. The blue chip index and the S&P 500 posted their biggest daily losses since September 2022.
The VIX index, which tracks volatility, closed at 38.57 points, the highest level since October 2020.
Earlier, Japan’s stock market experienced the biggest drop since Black Monday 1987spreading concerns in the international stock markets.
The salvo was delivered by July US jobs data that stoked concerns of a serious slowdown in the US economy and increased bets that the Federal Reserve will cut interest rates more than expected at its September meeting.
Investors continued to liquidate top tech stocks, especially in the artificial intelligence space: Nvidia stock tumbled 6.4% in Monday’s session, taking its losses from 52-week highs to 29%. Apple sank 4.8%, Tesla 4.2% and Super Micro Computer 2.5%.
It has also opened a market debate that behind the massive liquidations is the destabilization of the carry trade after the Japanese central bank’s decision to raise interest rates last week, narrowing the interest rate differential between Japan and the US. This contributed to the yen’s rise against the dollar, leading to a collapse of the strategy whereby investors borrow in low-yielding currencies such as the yen to buy high-yielding currencies such as the dollar.
The market was already poised for a correction, and the weaker-than-expected jobs data was simply the catalyst for the correction, says Sam Stovall, strategist at CFRA Research. The S&P 500 is off about 8% from its all-time high.
The governor of Chicago’s regional central bank said that if economic conditions worsen significantly, the central bank will correct it.