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Did the July jobs report signal an oncoming recession? Or has something else spooked stock markets around the globe? Like, say, a regional war in the Middle East? Or maybe a bad election outcome in the US?
After the Nikkei index tumbled 12% — its worst day in 27 years — the US markets took a dump this morning too:
In early trading, the Nasdaq Composite tumbled more than 4%. The S&P 500 fell more than 3% and the Dow was around 2.6% lower.
Turbulence started in Japan, with the Nikkei 225 falling more than 12%, its worst one-day drop since the crash after Black Monday in 1987. Losses cascaded across Europe and the U.S., as investors dumped riskier assets and flocked to safety.
The declines extended what has been a dizzying few days on Wall Street during which this year’s most popular trades have been aggressively unwound.
The fall didn’t start this morning, as an interactive chart on CNBC shows. The DJIA peaked on Thursday and then began falling from its peak at 41,193 and some change. By closing on Friday, the DHI had lost nearly 900 points; now it’s down nearly 2600 points since the Thursday close, and apparently is still falling.
CNBC believes the shock of the large miss in the unemployment report on Friday is driving the losses. But AI trading could be partly to blame too:
Fears of a U.S. recession were the main culprit for the global market meltdown after Friday’s disappointing July jobs report. Investors are also concerned that the Federal Reserve is behind in cutting interest rates to bolster an economic slowdown, with the central bank choosing instead to keep rates at the highest in two decades last week.
There’s also an unwinding of the once-hot artificial intelligence trade going on. Tech shares were among the worst performers Monday:
Nvidia tumbled 9.
