 "Wall Street indices took a significant hit on Monday (August 5). Reuters")
Wall Street stocks took a severe beating on Monday (August 5), extending a downturn triggered by economic uncertainties and recent turbulence in global financial markets.
Economic concerns are dominating after a series of disappointing reports, including a lacklustre jobs report last Friday (August 2). The eagerly awaited report revealed that the US economy added only 114,000 jobs last month, significantly down from June and much lower than expected, with unemployment at 4.3 per cent.
All three major indices were in negative territory throughout the day.
The Dow Jones Industrial Average dropped 2.6 per cent, or over 1,000 points, to close at 38,703.27. The broad-based S&P 500 fell 3.0 per cent to end at 5,186.33, while the tech-heavy Nasdaq Composite Index declined 3.4 per cent to 16,200.08.
The losses followed declines last Thursday and Friday, driven by weak US employment data and a negative survey from manufacturers that heightened recession fears.
Despite this, indices pared some losses in late morning trading after data indicated that US services sector activity in July rebounded from a four-year low due to an increase in orders and employment.
Market movers
Alphabet, the parent company of Google, plunged 4.6 per cent after a US judge supported antitrust officials’ claims that the company maintained a monopoly through its dominant search engine.
Impact Shorts
More ShortsApple had a tough day as well, falling 4.8 per cent after it was disclosed that Warren Buffett’s Berkshire Hathaway had reduced its stake in the tech giant.
Shares of Nvidia and Microsoft also saw declines.
Pringles maker Kellanova surged 16.2 per cent following a Reuters report that suggested candy giant Mars was considering a potential acquisition of the company.
Interest in interest rates
Traders are now predicting an 86 per cent probability that the Federal Reserve will cut rates by 50 basis points at its next policy meeting in September, with a 14 per cent chance of a 25 basis-point reduction, according to the CME Group’s FedWatch Tool.
With inputs from agencies