On Monday, the US stock market experienced a significant crash, with the Nasdaq 100 dropping nearly 6%. This decline was part of a larger global market rout that began late last week and accelerated on Monday morning. The tech-heavy Nasdaq Composite fell further into correction territory, while the Dow Jones Industrial Average also shed over 1,000 points.
The downward trend in the stock market started last week after disappointing earnings reports from companies like Amazon and Intel, as well as a weak July nonfarm payrolls report. These factors raised concerns about a potential recession.
Investor fears were further fueled by Japan's surprise rate hike and Berkshire Hathaway's decision to cut its stake in Apple by about 50%. Japan's stock market experienced its worst decline since the Black Monday crash in 1987, falling 12%, after the Bank of Japan raised interest rates by 15 basis points. This led to an unwind of the popular Yen carry trade and added to the recent stock market losses.
Overall, investors are nervous about the different paths central banks are taking and the potential for an economic recession. The recent market volatility has also been influenced by geopolitical tensions in the Middle East and uncertainty surrounding the upcoming Presidential election.
While some analysts believe that there may be opportunities for buyers to capitalize on discounted prices, others are concerned that the recent market downturn may signal a larger shift in investor sentiment. The future trajectory of the stock market remains uncertain, with various factors contributing to the current volatility.
In addition to the stock market crash, other significant developments included Nvidia chips being used by the Chinese military despite a US blockade and concerns about a potential reckoning in the AI industry.
Commodities, bonds, and cryptocurrencies also saw fluctuations on Monday, with declines in oil prices, gold, and Bitcoin, as well as a drop in the 10-year Treasury yield. The overall economic landscape remains uncertain as investors navigate through a period of heightened volatility.