The ongoing spectre of a looming recession in the US has hit the stock market, with most prominent equities registering significant sell-offs.
The outcome of this crash was a gargantuan $2.9 trillion wiped from stocks in the early trading hours of August 2.
It has been characterized as the largest sell-off since the 2020 COVID-19 crash.
Stock Market Chaos Erases $2.9 Trillion in a Day
Most sectors of the market ended in the red.
Technology stocks like Microsoft and Nvidia tanked by 2% and 5%, respectively.
Communication behemoths like Alphabet and Meta Platforms also did not remain untouched in the market mayhem, and both saw declines of 2.7% and 3.3%, respectively.
Consumer-focused stocks also were not spared, with Amazon stocks tanking by a huge 11%, and Tesla also saw a decline of 1.92%.
Financial bigwigs like JPMorgan Chase saw a decline of 1.84% and Berkshire Hathaway by 1.45%.
The healthcare sector once considered quite robust and able to weather the vagaries of the market, also saw a mixed performance.
While some pharma companies like Novo Nordisk weathered the storm with a slight gain of 3.23%, others like Eli Lilly fell by 4.14%.
Consumer durable stocks, which were considered relatively stable during market turmoil, were also bruised and battered. Procter & Gamble and Coca-Cola stocks tanked by 1.66% and 0.92%, respectively.
The energy and utilities sectors, which were also considered safe investments, incurred major losses. Major energy giants such as Mobil and Chevron both ended up in the red, indicative of a general and widespread market meltdown.
Market gurus have already started to analyze the reasons for the market meltdown. The sell-off was preceded by the tremors in the “Magnificent 7” tech giants, which, as per reports by Finbold, had witnessed a collective swing of over $3 trillion in market value within the past three weeks. This ignited fears of an economic downturn in the near future.
Concerns that the US is slipping into a recession rattled investors in markets across Europe and Asia.
This started a bout of sell-offs, and the process was accelerated after a poor employment report in the US. The US economy generated 114,000 jobs last month against an expected 185,000 jobs, hinting at an economic slowdown.
The rate of unemployment in the US reached 4.3% in July, which is at least 0.5% higher than the minimum of the previous 12 months’ averages.
Economic experts say that the 0.5% increase in jobless rates is above the benchmark, suggesting that the economy is slowing down and there is a looming threat of recession.
Writing on X, Financial Analyst and Value Investor Jacob King wrote: “Over $2.9 trillion has been wiped out from major indices and stocks this morning due to growing fears of a global recession. This is the worst day for stocks since March 16, 2020, during the COVID-19 pandemic fears.”
The phenomenon is not limited to US markets, as markets have been imploding all across the globe.
Japanese stocks also suffered their worst slump since the COVID-19 crash, with the Nikkei 225 share index tumbling by 5.8 per cent to its lowest closing level since January.
In Australia, the ASX fell 2.5 per cent, while Hong Kong’s Hang Seng was down 2.1 per cent. In London, the FTSE 100 index lost more than 120 points at one stage, down 1.5 per cent.
Technology stocks in Europe also saw red, with the shares of Dutch chip-making equipment manufacturer ASML falling 9.6 per cent, while its rival ASM International saw a 13.7 per cent slump.
Jim Reid, an analyst at Deutsche Bank, told The Guardian on Friday morning: “The past 24 hours have seen an increasingly precarious backdrop for risk markets, with a risk-off mood on the back of another batch of weak US data yesterday followed by mostly downbeat tech earnings overnight.”
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