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In a dramatic global market sell-off, the Dow Jones Industrial Average dropped 1,000 points, marking a severe downturn. The Nasdaq experienced a sharp decline of 6%, while the S&P 500 opened 3.9% lower.
Key Points:
- Tech Giants Hit Hard:
- Nvidia: Down 14%
- Apple: Down 6.4%
- Meta: Down 5.4%
- Amazon: Down 6%
- Broader Market Impact:
- Asian and European markets also suffered significant losses.
- Bond yields fell as investors moved to safe-haven assets.
Premarket Sell-off:
- Magnificent Seven:
- The group’s stocks, which drove indexes to record highs, lost a combined $1.3 trillion in market value.
- Apple:
- Fell 10% after Berkshire Hathaway halved its stake, reflecting Warren Buffett’s concerns about the economy and stock valuations.
- Nvidia:
- Slumped 14.3% due to reports of delays in AI chip launches.
- Microsoft and Alphabet:
- Both slid nearly 6%.
Economic Indicators:
- Weak Jobs Report:
- Triggered the “Sahm Rule,” a recession indicator.
- Labor market and manufacturing activity showed signs of weakness.
- Interest Rates:
- Traders see a 90.5% probability of a 50 basis points rate cut by the Fed in September.
- Wall Street brokerages revised Fed rate projections for 2024, indicating greater policy easing.
Market Analysis:
- Sam Stovall, CFRA Research:
- Suggested the Fed might opt for a 25 basis points cut instead of 50, to calm markets without increasing investor tension.
Bond and Volatility:
- Bond Yields:
- 10-year note: 3.6839%
- Two-year note: 3.6907%
- CBOE Volatility Index:
- At 62.64, highest since April 2020.
Crypto and Other Stocks:
- Crypto-linked Stocks:
- Bitcoin hit a five-month low.
- Coinbase: Down 18.3%
- MicroStrategy: Down 25.4%
- Riot Platforms: Down 17.5%
- Pringles Maker Kellanova:
- Soared 22.1% after reports of a potential buyout by Mars.
The sell-off reflects growing investor concerns amid mounting economic uncertainties, signaling a potential shift in the Fed’s approach to interest rates.