The shock of Black Monday, which saw a significant plunge in the stock markets of major Asian countries, reached the New York Stock Exchange yesterday.
According to the Wall Street Journal (WSJ), the Dow Jones Industrial Average, which tracks 30 major companies, closed at 38,703.27, down 1,033.99 points (-2.60%) from the previous trading day. The S&P 500 index, focused on blue-chip stocks, dropped 160.23 points (-3.00%) to 5,186.33, while the tech-heavy Nasdaq index fell 576.08 points (-3.43%) to 16,200.08. Both the Dow and S&P indices recorded their most significant declines since September 13, 2022, nearly two years ago.
Notably, major tech stocks raising concerns about overheating saw declines. Nvidia, which has been fueling the U.S. market’s rise with the AI boom, dropped by 6.4%. Its major client, Microsoft, experienced a stock decline of 3.27%. Other tech giants also faced setbacks: Amazon fell by 4.10%, Meta decreased by 2.54%, and Tesla dropped by 4.23%. Apple, which reportedly saw Berkshire Hathaway’s CEO Warren Buffett sell half of his stake, saw its stock decline by 4.82%.
Investment experts believe this is also a result of growing concerns over an economic recession due to a slowdown in the labor market. The U.S. Department of Labor announced last Friday that the unemployment rate for July was 4.3%, higher than the market expectation of 4.1%. The Bank of Japan’s decision in March to end negative interest rates for the first time in 17 years, leading to a significant unwinding of carry trades, also played a negative role. Carry trades involve borrowing yen to invest in foreign assets.
Sam Stovall, chief investment strategist for CFRA Research, stated that the market has been grappling with several uncertainties, and investors have recently begun to notice them. He explained that the employment indicators merely acted as a catalyst.
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