caroline valetkevich
NEW YORK (Reuters) – U.S. stocks ended sharply lower on Monday, with the Nasdaq and S&P 500 each posting at least a % fell. Major investors have reduced their stakes.
All three major indexes posted their biggest three-day declines since June 2022, with the Nasdaq and S&P 500 closing at their lowest since early May.
Recession fears rattled global markets after last week’s weak economic data, including Friday’s weak U.S. jobs report, driving investors out of risky assets.
Investors are concerned that the economy is losing momentum faster than expected and that the Federal Reserve made a mistake in keeping interest rates unchanged at its last policy meeting.
Apple’s stock price fell 4.8% after Berkshire Hathaway cut its stake in the iPhone maker in half. Billionaire investor Warren Buffett has also helped Berkshire’s cash pile soar to $277 billion.
Nvidia, Microsoft and Alphabet also fell, and the CBOE Volatility Index, Wall Street’s measure of fear, closed at its highest level since October 28, 2020. All 11 sectors of the S&P 500 fell, led by a decline in technology.
Chicago Fed President Austan Goolsby downplayed concerns about a recession but said Fed officials need to be aware of the changing environment to avoid restricting interest rates too much.
“We’re seeing a decline today as an extension of the anxiety that was felt last week,” said Neville Jhaveri, a portfolio manager and head of the Empiric LT equities team at Allspring in Washington.
“Starting with last week’s jobs report, it clearly led to the idea that the Fed needs to start being more proactive about trends in unemployment,” he said.
The Dow Jones Industrial Average fell 1,033.99 points, or 2.6%, to 38,703.27, the S&P 500 Index fell 160.23 points, or 3.00%, to 5,186.33, and the Nasdaq Composite Index fell 576.08 points, or 3.43%, to 16,200.08.
The S&P 500 fell more than 4% to an intraday low of 5,119.26.
The index pared losses late in the morning after data showed U.S. service sector activity rebounded from a four-year low in July on the back of higher orders and employment.
Weak jobs data and a contraction in manufacturing activity in the world’s largest economy added to concerns following recent disappointing forecasts for major U.S. technology companies. The Nasdaq Composite Index on Friday confirmed that it is in correction territory.
According to CME Group’s FedWatch tool, traders are currently pricing in an 86% chance that the Fed will cut interest rates by 50 basis points at its next policy meeting, scheduled for September, and a 14% chance that it will cut rates by 25 basis points. There is.
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The selling has focused on the so-called Magnificent Seven stocks that have pushed the index to record highs this year.
Traders also said part of the stock decline was due to rapid unwinding of positions in carry trades, where investors borrow money from low-interest countries such as Japan and Switzerland to fund high-yield assets in other countries. he pointed out.
Pringles maker Keranova soared 16.2% after Reuters reported that confectionery giant Mars is considering a possible acquisition of the company.
Trading volume on U.S. exchanges was 16.5 billion shares, compared with an average of 12.29 billion shares traded over the past 20 trading days.
Declining issues outnumbered advancing issues on the New York Stock Exchange by a ratio of 9.04 to 1. On the Nasdaq market, a 6.44-to-1 ratio favored declining stocks.
The S&P 500 has recorded 16 new highs and 26 new lows in 52 weeks. The Nasdaq Composite recorded 14 new highs and 508 new lows.
(Reporting by Caroline Valetkevich in New York; Additional reporting by Shubham Batra and Shashwat Chauhan in Bengaluru; Editing by Karolina Mandl in New York; Arun Koyur and Matthew Lewis)
