The financial world is in turmoil as markets around the globe experienced a historic collapse on Monday, erasing more than $1.93 trillion in value. The U.S. stock market led the charge, with major indices suffering severe losses. The Dow Jones Industrial Average plummeted by 863.70 points, or 2.17%, closing at 38,873.56. The S&P 500 and Nasdaq Composite fared even worse, dropping 2.42% and 2.77%, respectively.
The catalyst for this massive sell-off was the release of disappointing economic data that intensified fears of an impending recession. On Friday, the Department of Labor reported a meager addition of 114,000 jobs in July, far below expectations, and a rise in the unemployment rate to 4.3%. These figures raised red flags about the health of the U.S. economy, leading investors to flee riskier assets.
The impact of these concerns was not confined to the U.S. Markets worldwide plunged in response. Japan’s Nikkei 225 experienced its worst day since the 1987 Black Monday crash, dropping 12.4%. South Korea’s Kospi index fell 8.8%, European stock markets tumbled around 3%, and Bitcoin saw a 12% drop. The Russell 2000 index, which tracks small-cap stocks, fell 5.5%.
Big Tech stocks were hit hard, with shares of Alphabet, Netflix, and Meta declining between 2.5% and 4.0%. Nvidia, an AI chip maker, saw its stock plunge over 8% due to delays in the launch of its new chips, while Apple fell 4.6% after Warren Buffett’s Berkshire Hathaway reduced its stake in the company.
In the bond market, investors flocked to safe-haven assets, causing Treasury yields to fall. The yield on the 2-year Treasury dropped to 3.81%, down from 3.88% on Friday. Precious metals also took a hit, with gold prices falling over 2% and silver dropping 5.1% as investors liquidated positions amid the market rout.
Crude oil prices extended their losses, hitting a seven-month low as global market sentiment soured. Brent crude futures slipped below $76 a barrel, while West Texas Intermediate dropped to just above $72.
For a detailed breakdown of today’s market turmoil and its implications, visit LiveMint.