• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Editor's Pick U.S. markets close sharply lower — but some economists say economy looks stable
Editor's Pick

U.S. markets close sharply lower — but some economists say economy looks stable

by August 6, 2024
by August 6, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Stocks saw a dramatic pullback — their third in as many trading days — as a confluence of factors including ongoing fears of an economic slowdown and repositioning on Wall Street sent shares tumbling.

The Dow Jones Industrial Average dropped 1,034 points, or 2.6%. The Nasdaq Composite lost 3.4%, and the S&P 500 slid 3%. The blue-chip Dow and S&P 500 were on track for their biggest daily losses since September 2022.

The rout on Monday was sparked by a massive sell-off in Japanese stocks. The benchmark Nikkei 225 index fell 12.4%, its worst day since the 1987 ‘Black Monday’ crash rattled investors around the world.

Japan and other Asia-Pacific markets appeared to recover on Tuesday, however, with the Nikkei rebounding as much as 10%.

Traders work on the floor of the New York Stock Exchange on Monday in New York City.Spencer Platt / Getty Images

The Japanese drawdown on Monday was partly in response to the worse-than-expected jobs report published Friday that showed U.S. unemployment rising to 4.3% and just 114,000 jobs added in July.

Yet, while the jobs report caused some market commentators to argue that the Federal Reserve should have cut rates sooner — it held them steady again at 5.5% last week as it sought to further dampen inflation — other analysts pushed back on that idea. That latter group gained support when the Institute for Supply Management (ISM) published data later Monday showing services businesses were still seeing healthy demand.

As soon as that report was published, stocks started erasing some of their earlier losses, while bond purchases, which had surged as investors sought safe-haven assets, faded.

Instead, some observers placed some of the blame for the global stock sell-off on the winding down of the so-called ‘carry trade,’ which had seen investors borrow money at lower interest rates denominated in Japan’s yen currency in order to buy higher-yielding assets elsewhere.

The profitability of that trade rapidly drew to a close in recent days, however, after the Bank of Japan signaled its intention to raise interest rates, while the U.S. Federal Reserve said it would soon likely lower them.

As a result, the value of the yen soared against the dollar, erasing all the gains the greenback had made this entire year.

There were other reasons for the stock retreat. It was led by tech shares, and especially ones concentrated in the bet on artificial intelligence. Nvidia, the leader of the group thanks to its specialized GPU computer chips, and rival Intel both closed down 7%. Microsoft, which has also been at the forefront of large language model (LLM) investments, fell more than 3%. And Google’s parent, Alphabet, another firm seeking to pivot to AI, declined almost 5%.

Only a month ago, shares in those companies had led much of this year’s rally, and the Nasdaq had hit an all-time high. But those were the first to see investors hit the proverbial exits Monday as traders increasingly believe the gains from AI bets will not materialize in the short term.

Apple also tanked 5% on the day. Over the weekend, Warren Buffett’s Berkshire Hathaway disclosed it had sold almost half its Apple holdings.

But analysts say that decision was likely less a vote of no-confidence in the iPhone maker than simply Berkshire and Buffett raising cash in what observers have concluded was an increasingly overbought market.

And therein is perhaps the upshot of the sell-off: It was simply time to take profits from a market that had been on a tear all year.

“This is the confluence of a very high market that has been soaring and riding on a lot of sentiment and emotion. For several months now, the momentum trade has been the successful trade,” said Michael Farr, CEO of Farr, Miller & Washington, a wealth and investment management firm.

“While folks make fundamental arguments that give them comfort, everybody in the back of their minds knows stuff doesn’t go up 30% in six months,” he added. “So, when you’re in a period of huge profits, it’s very easy to take profits. It’s a much easier decision to say I want to take my chips and go home here.”

This post appeared first on NBC NEWS
You Might Also Like
  • Netflix to stream WWE’s ‘Raw’ starting next year in its biggest jump into live entertainment
  • Dollar General CEO warns consumers are cash-strapped and says 2025 won’t be better
  • Quectel Demonstrates ASIL Solution for Advanced Automotive Applications at CES 2023
  • Bob Iger says Disney’s mission is to entertain, not send messages
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Sandra Lee shares breaking point in split from Andrew Cuomo: ‘Every window and door closed’
next post
Retiring Corvette ‘godfather’ on EVs, spinoff and a performance SUV

You may also like

Fox could likely survive a nine-figure loss to Dominion, media...

April 18, 2023

IoT Security Foundation Announces Fifth Report on Consumer IoT Vulnerability...

January 23, 2023

‘Pharmageddon’ could close pharmacies as protest spreads

November 1, 2023

U.S. bans imports of certain Apple Watches that may infringe...

December 28, 2023

Former Ozy Media head sentenced to nearly 10 years in...

December 17, 2024

Semtech Unveils New Brand Reflecting Company’s Vision to Enable a...

March 10, 2023

New FlorLink SmartHub for Retail Enterprises Now Connected by Sequans...

December 7, 2022

Most Americans falsely think the U.S. is in recession, poll...

May 24, 2024

TikTok parent company dismisses intern who it says ‘maliciously interfered’...

October 22, 2024

Hermès lawsuit claims luxury retailer reserves its famed Birkin bags...

March 25, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right Now

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025
    • U.S. foreign tax bill sends jitters across Wall Street

      May 30, 2025
    • Amazon taps Xbox co-founder to lead new team developing ‘breakthrough’ consumer products

      May 30, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,765 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,472 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,451 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,432 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,308 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right...

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Netflix to stream WWE’s ‘Raw’ starting...

    January 24, 2024

    Trump moves to develop sovereign wealth...

    February 4, 2025

    ‘Moana 2’-led Thanksgiving box office could...

    November 27, 2024
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here