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On Monday, Eastern Time, the three major U.S. stock indexes closed lower, with the Dow Jones Industrial Average down 2.6%, or 1,033.99 points; the Nasdaq fell 3.43%; and the S&P 500 fell 3%, marking the largest single-day drop since September 2022.

Popular technology stocks generally fell, Nvidia (market value evaporated $167.2 billion), Intel fell more than 6%, Apple (market value evaporated $160.9 billion), Amazon (market value evaporated $72.2 billion), Tesla (market value evaporated $28 billion), Google (market value evaporated $91 billion) fell more than 4%, Apple recorded its largest single-day drop since September 2022, Microsoft fell more than 3% (market value evaporated $99.1 billion), its market value fell below $3 trillion, Meta fell more than 2% (market value evaporated $31.4 billion). As of the close,The total market value of the U.S. tech giants evaporated by US$649.8 billion overnight, equivalent to RMB 4.64 trillion.

According to the Securities Times, after the unexpected "cold" U.S. non-farm payrolls data in July, the shadow of recession has loomed over Wall Street, and the market is betting that the Federal Reserve will cut interest rates on a large scale to prevent a feedback loop between the market and the real economy that would trigger a recession. Some Wall Street analysts even pointed out that the Federal Reserve may be forced to urgently initiate an interest rate cut before the September interest rate meeting. JPMorgan Chase and Citigroup also urgently adjusted their forecasts, predicting that the Federal Reserve will cut interest rates by 50 basis points in September.

In addition, Buffett's large-scale selling in the second quarter also exacerbated market concerns. Wall Street analysts said that Buffett's large-scale selling may be due to concerns about a recession and that Berkshire is a "company preparing for a weak economic environment."

It is worth mentioning that "the Federal Reserve needs to lower interest rates." On August 4th local time, Musk wrote on X.“It’s foolish that they haven’t done so already.”

Musk made the comments in response to a post on X that said billionaire investor Warren Buffett's Berkshire Hathaway increased its reserves of cash equivalents and short-term Treasury bills after cutting its stock positions, including its largest holding, Apple, by 50%. "He (Buffett) obviously expected some kind of correction, or just thought there was no better investment than U.S. Treasuries," Musk said.

The three major U.S. stock indexes fell sharply

On Monday, Eastern Time, the three major U.S. stock indexes fell collectively. As of the close, the Dow Jones Industrial Average fell 1,033.99 points, or 2.60%, to 38,703.27 points; the Nasdaq fell 576.08 points, or 3.43%, to 16,200.08 points; and the S&P 500 fell 160.23 points, or 3.00%, to 5,186.33 points.

Large technology stocks performed weakly, with Apple down 4.82%, Amazon down 4.1%, Netflix down 2.46%, Google down 4.45%, Meta down 2.54%. Microsoft fell 3.27%, and its market value fell below $3 trillion.

Most chip stocks fell, with Intel down 6.38%, Nvidia down 6.36%, Micron Technology down 2.46%, Microchip Technology down 2.08%, TSMC down 1.45%, Broadcom down 1.21%, Qualcomm down 0.85%, ASML up 1.36%, and AMD up 1.75%.

Bank stocks fell across the board, with JPMorgan Chase down 2.11%, Goldman Sachs down 2.46%, Citigroup down 3.33%, Morgan Stanley down 3.94%, Bank of America down 2.45% and Wells Fargo down 2.12%.

Airline stocks fell across the board, with Boeing down 1.79%, American Airlines down 3.53%, Delta Air Lines down 4.64%, Southwest Airlines down 5.37% and United Airlines down 5.7%.

Popular Chinese concept stocks fell across the board, with NIO down nearly 4%, Xpeng Motors down more than 3%, Futu Holdings, Baidu, and NetEase down more than 2%, Li Auto down more than 1%, iQIYI, JD.com, Alibaba, Weibo, and Tencent Music down slightly. Vipshop and Bilibili rose more than 3%.

In terms of economic data, the U.S. Department of Labor recently released data showing that the U.S. unemployment rate rose by 0.2 percentage points month-on-month to 4.3% in July this year, the highest since October 2021. The data also showed that the number of new jobs in the U.S. non-agricultural sector in July was 114,000, far below market expectations and lower than the figure of 179,000 in June.

In terms of international oil prices, as of the close of the day, the price of light crude oil futures for September delivery on the New York Mercantile Exchange fell 57 cents to close at US$72.94 per barrel, a drop of 0.79%; the price of London Brent crude oil futures for October delivery fell 51 cents to close at US$76.30 per barrel, a drop of 0.66%.

In terms of precious metals, as of press time, COMEX gold futures fell 0.8% to $2,450/ounce, and COMEX silver futures fell 3.83% to $27.3/ounce.

Recession fears stir U.S. stocks

Concerns about an imminent U.S. recession have caused a sharp drop in U.S. stocks recently, with weak economic data triggering a rush for safe-haven assets. A series of lackluster earnings reports from large technology companies also weighed on market sentiment.

According to Dow Jones Market Data, the stock market's retreat on Friday put the tech-heavy Nasdaq Composite Index into correction territory, which is typically a drop of at least 10% but no more than 20% from a recent high. A bear market begins after a correction of at least 20%.

Data showed that the S&P 500 fell 2.1% last week, its biggest weekly drop since early April. At the same time, the Dow Jones Industrial Average also fell 2.1%, its worst week in more than two months.

Faced with sudden and large fluctuations, investors want to protect their portfolios from the impact of the economic slowdown and begin to consider withdrawing from popular technology stocks and investing in defensive stocks. Defensive stocks usually provide continuous dividends and stable income regardless of the state of the US economy. However, Wall Street analysts said that considering that the overall market may continue to fluctuate sharply for the rest of the summer, the benefits of rotating into "safer stock sectors" may be very limited for investors.

According to the Securities Times, George Ball, CEO of Sanders Morris Harris, said: "We saw funds withdraw from overvalued technology stocks in July and invest in broader market sectors, but in the past few days, funds have withdrawn from all sectors, not just the 'seven major technology stocks'. Entering safer sectors does not benefit much, and continuing to stay in more volatile areas will face greater risks."

But some analysts said investors may have overreacted to a string of weaker-than-expected economic data and that last week’s sell-off may have been overdone.

“It seems like last Friday was a sign of overselling by investors as people sold the good stocks along with the bad stocks,” said Kinahan, CEO of IG North America and president of Tastytrade. “I think it’s more of a general reassessment and review of equity values.”

And it's not just regular investors who are panic-selling. On Saturday, Warren Buffett's Berkshire Hathaway disclosed that it had halved its stake in Apple in the second quarter, while boosting its cash position to a record $277 billion and buying Treasury bonds.

Daily Economic News, Securities Times, public information

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