Global stocks plummeted due to economic concerns and fears of a recession, led by tech companies

From Nasdaq: 2024-08-05 18:13:42

Global equity markets took a deep dive on Monday, with US stocks leading the plunge as the S&P 500, Dow Jones, and Nasdaq indexes all closed sharply down. The sell-off was fueled by concerns about the US economy and the Fed’s response, prompting a flight to safety into government bonds. Megacap tech stocks like Apple and Amazon led the decline, while Bitcoin fell to a 5-1/2 month low.

Market sentiment improved slightly after the US Jul ISM services index beat expectations, easing recession worries. Chicago Fed President Goolsbee added to the positivity by stating that US economic growth remains relatively steady. However, concerns about the upcoming earnings season persist, with S&P 500 companies expected to see a +9% y/y increase in Q2 earnings despite only 43% beating revenue expectations.

The likelihood of Fed rate cuts has been steadily increasing, with the markets now predicting a near certainty of a -25 bp cut in September and a 98% chance of a -50 bp cut. Overseas markets also suffered sharp losses, with the Euro Stoxx 50, China’s Shanghai Composite, and Japan’s Nikkei all dipping to multi-month lows. Interest rates dropped, with the 10-year T-note yield falling to a 14-month low. Bond yields in Europe rebounded slightly after reaching lows.

Tech stocks like Nvidia, Intel, and Microsoft felt the brunt of Monday’s sell-off, dragging the broader market down. Chip stocks slumped, while mining and travel companies also suffered losses due to economic uncertainty. Moderna saw a decline after a downgrade, while companies like Kellanova, Tyson Foods, and Sotera Health saw gains on positive news. Numerous companies are set to report earnings on 8/6/2024, including Airbnb, Amgen, Caterpillar, and Uber.



Read more at Nasdaq: Stocks Finish Sharply Lower on Economic Jitters