Global Market Rout Returns Home Sinking S&P 500 and Nasdaq 4%

Barry Adams
05 Aug, 2024
New York City

The global market sell-off that originated last week reverberated on Wall Street on Monday as investors recalibrated their economic growth and corporate earnings outlook. 

The S&P 500 index declined 3% and the Nasdaq Composite dropped 3.4%, but at the opening, the benchmark indexes plunged as much as 4.5% and 6.5%, respectively. 

Only two weeks ago, investors rushed to congratulate the Federal Reserve as policymakers struggled to cool inflation while keeping economic growth intact—the so-called soft landing. 

However, market sentiment reversed sharply after key economic indicators suggested weakening economic activities and labor market expansion, suggesting that the economy may be losing steam faster than previously anticipated. 

The sudden shift in the economic narrative caught investors off guard and set in motion a decline on Wall Street last week, which rippled to Asia and Europe with heightened amplitude. 

In Monday's trading, last quarter's big winners linked to artificial intelligence plunged in high double-digits, setting another round of sell-off across the Atlantic. 

Intel, Nvidia, Broadcom, Qualcomm, AMD, and TSMC plunged between 5% and 15% at the opening, but those losses were trimmed after an hour of trading. 

The yield on 10-year U.S. Treasury notes slipped to 3.7% as investors sought a safe haven in bond markets as stock market indexes hit new lows in the last two weeks. 

In overnight trading, Japan's Nikkei plunged 12.4%, the largest point decline in the index's history and the second-largest fall in percentage, after the Bank of Japan lifted rates that contributed to a sharp rebound in the yen. 

In the week ahead, in the U.S., all eyes will be on the fresh batch of earnings, including updates from Amgen, Caterpillar, Disney, and Uber.

On the economic front, the service sector activity report is likely to show a rebound in growth in July after a contraction in June.

Investors are also awaiting the release of the international goods and services trade balance, and changes in the deficit with China will take center stage.

 

U.S. Indexes and Treasury Yields

The S&P 500 index is down about 9%, and the Nasdaq Composite has dropped by 14% from its recent high in early July. 

The S&P 500 index decreased 2.9% to 5,187.58, the Nasdaq Composite fell 3.7% to 16,159.91, and the Russell 2000 index declined 4.3% to 2,019.43. 

The yield on 2-year Treasury notes edged lower to 3.87%, 10-year Treasury notes decreased to 3.70%, and 30-year Treasury bonds decreased to 4.03%.

WTI crude oil decreased $0.39 to $73.13 a barrel, and natural gas prices edged down 2 cents to $1.94 a thermal unit.

Gold decreased by $50.42 to $2,392.42 an ounce, and silver declined by $1.36 to $27.17. 

The dollar index, which weighs the US currency against a basket of foreign currencies, edged lower to 102.52.

 

U.S. Stock Movers 

Artificial intelligence-linked stocks rebounded from steep losses on Monday morning. 

Nvidia declined 6.5% to $99.23, Qualcomm dropped 0.5% to $158.14, TSMC decreased 5.1% to $142.30, but AMD managed to shake off losses to rise above the flatline to gain 0.5% to $133.25. 

Apple decreased 5.4% to $207.97 after Warren Buffett-controlled Berkshire Hathaway disclosed in regulatory filings that it had cut its holding in the company by half. 

Tesla declined 5.4% to $196.40, and company founder Elon Musk revived a lawsuit against OpenAI and its founder, Sam Altman.