International markets are bleeding to today as investors weigh the ramifications of last week’s dire jobs report. Recession fears are swirling around Wall Street as most major indices brace for another significant loss.
The recent market selloff appears to be just hitting its stride. The S&P 500 slipped 2.5% last Friday after the July jobs report showed the unemployment rate rose to 4.3%, its highest level in years, on fewer than expected new jobs. The report sent recession concerns through the roof, with many economists theorizing the Federal Reserve has been too slow to cut rates.
Others believe the jobs report has simply brought out traders’ preexisting fears that have hovered over markets all year.
“The market was whistling past the graveyard. I think people were basically lulled into a sense of security, yet the market itself was very vulnerable to a correction — and the weaker than expected economic and employment data provided that catalyst for correction,” said Sam Stovall, CFRA Research Chief Investment Strategist.
Surprisingly, legendary investor Warren Buffett is also playing a role in today’s selloff. Indeed, Buffett’s Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) released a disclosure over the weekend showing he has recently sold about half his holding in Apple (NASDAQ:AAPL) stock and a large number of Treasury bills. The news has predictably also weighed on AAPL stock, which is down about 4% at the time of writing.
Stocks Plummet as Recession Fears Take Hold of Wall Street
The S&P is on track to shed another 2% of its value today, putting it roughly 7.5% below its all-time high on July 16, approaching correction territory — defined as a 10% drop from a recent high. Similar stories for both the Dow Jones, which opened down 1,000 points today, as well as the tech-centric Nasdaq Composite, which is eyeing a 2.5% loss. Indices are still well in the green for the year, however, with both the S&P and Nasdaq up about 10% since the start of 2024.
Today’s losses aren’t limited to American markets, however. Japan’s Nikkei 225 fell 12% on Monday, its worst single-day loss since the 1987 Black Monday crash on Wall Street. This is in part due to the deterioration of the yen “carry trade,” which is eating away Japanese investor profits. Europe’s Stoxx 600 also closed down more than 2%.
Economic data will remain key heading into the final leg of the year. Upcoming inflation, jobs, GDP and spending figures may determine whether the market’s cold front will be brief or even more brutal.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
