Wall Street closed, this Monday, August 5, in red, its worst day in two years, with sharp losses in its key indicators, mainly the Dow Jones Industrial Average which fell 1,000 points (-2.60%) to 38.70, due to fears of a recession in the US due to poor employment data and with some economists recommending an emergency rate cut.
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According to analysts, Volatility reaches levels not seen since the stock market crashes of March 2020, linked to the declaration of the Covid-19 pandemic, due to fear that the US Federal Reserve (FED) will dictate the expected reduction in interest rates too late.
The Vix index, known as ‘the fear indicator’ and? measures volatility, shot up 100%.
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He Nasdaq fell more than 576.08 points (-3.43%) while the selective S&P 500 fell 3.00%, 163.23 points, to 5,186 points, amid fears of a recession – which exacerbated the problems caused by the strength of the yen with the rise in rates by the Bank of Japan – and nervousness about the results of the big technology companies.
The streak on the Stock Market, which marked the day and sounded alarm bells, began just five minutes after its opening, after the sharp decline in Asian markets on Monday, with the S&P 500 ending 8.5% below its July high and the Nasdaq 13% below that milestone.
Stock market crash.
EFE
What’s going on?
The Fed kept its high interest rate environment unchanged on Wednesday and suggested that a rate cut would come soon, but Weak labor market and industrial activity data released on Thursday and Friday made investors nervous.
(See: European and Asian markets fall on fears of a US recession).
The July U.S. jobs report indicated that job creation slowed to a lower-than-estimated 114,000 positions, The unemployment rate rose to 4.25%, a figure that is close to a recession indicator known as the ‘Sahm rule’, which compares the average unemployment rate for the last three months with that for the last 12.
Among the most affected sectors is the technological (-5%), and highlighted the fall in Nvidia, which closed the day at -6.36%. This fall was widespread and All of the top 30 Dow Jones stocks closed in red, with notable falls in Intel (-6.34%) and Cisco (-4.11%).
The collapse of the chipmaker, a leader in artificial intelligence (AI) that has had a buoyant trajectory in recent months, occurs, however, amid news that its Blackwell chips will be delayed for several months due to design flaws.
While Manzana had losses of -4.28% and the shares of Microsoft registered -3.27% and 7.4% amid a five-day losing streak.
Market analyst Manuel Pinto He noted that the data raised fears among investors that the Fed “could have waited too long to cut rates and the economy could face a ‘hard landing’, which is a slowdown or recession after a period of rapid growth“.
Tiffany Wilding, an analyst at PIMCO, He added that the economy “has not collapsed yet” and advocated continuing “in search of clues”: “The upcoming employment report and recovery from July weakness will be key to setting the tone for the September Fed meeting“.
In other asset markets, Texas oil, WTI, The oil price began trading at around $72 a barrel, erasing virtually all of the year’s gains as concerns about demand in China added to the potential for a recession in the U.S.
(See: How Colombia and Latin America became the least desired regions for investors).
Bitcoin, the main cryptocurrency, fell 11% to around $51,750.
Wall Street.
Bloomberg
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.
EFE
