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Stock Market Today: Stocks in meltdown as Fed triggers global rout
By Martin Baccardax,
5 hours ago
Check back for updates throughout the trading day
U.S. stocks plunged lower Monday, while safe-haven Treasury bonds rallied and oil prices slumped to year-to-date lows, amid a global market rout tied to recession fears, overbought tech stocks and rising geopolitical risks.
Updated at 10:08 AM EDT
Growth relief
The Institute for Supply Management's closely-tracked reading of service sector activity, the most important driver of U.S. economic growth, came in firmly ahead of forecasts for last month, providing some much-needed relief for the plunging stock market.
The headline ISM reading rose to 51.4 points last month, well below the 50-point mark that separates growth from contraction and Wall Street's 50.4 point forecast.
Benchmark 10-year note yields jumped 5 basis oints to 3.767% while 2-year note yields rose 8 basis points to 3.863%
Stocks remain firmly in the red, with the S&P 500 down 138 points, or 2.6% and the Nasdaq down 524 points, or 3.13%.
Updated at 8:48 AM EDT
The Wall (Street) comes tumbling down
The S&P 500 was marked 200 points lower, or 3.74%, in the opening minutes of trading, with the Nasdaq falling 844 points, or 5.02%.
The Dow, meanwhile, plunged 1,150 points as the small-cap Russell 2000 fell 77 points, or 3.51%.
Benchmark 10-year note yields slipped another 3 basis points to 3.718%, with 2-year notes pegged at 3.781%
Updated at 8:45 AM EDT
Normal curvature
A big move in the Treasury bond markets this morning has benchmark 2-year note yields, which are most-sensitive to changes in Fed rate policy, falling below 10-year note yields for the first time in more than two years.
The move marks the end of the longest "inversion" of the U.S. Treasury yield curve on record and is adding to concerns of a near-term recession in the world's biggest economy.
Updated at 8:26 AM EDT
Nasdaq 1000 - not the good one
The Nasdaq is set to fall more than 1,000 points at the start of trading, based on U.S. futures prices and their fair value counterparts, with the S&P 500 called 223 points to the downside.
The Dow Jones Industrial Average, meanwhile, is set for a 1,153 point opening bell slump, with a 9% pullback for Apple likely leading declines.
Updated at 7:53 AM EDT
Nvidia crumbles
Nvidia shares slumped in premarket trading, and look set to tumble into bear market territory, as investors unwind holdings in the AI chipmaker amid reports of a delay in its new Blackwell processors.
Nvidia shares were last seen 12.7% lower in premarket trading to indicate an opening bell price of $93.73 each.
CBOE Group's VIX index, Wall Street's go-to volatility gauge, is moving sharply higher in early Chicago trading, rising nearly 170% and topping the $50 mark for the first time in four years.
That suggests traders are expecting daily swings of around 3.12% for the S&P 500 each day for the next month.
Stock Market Today
Stocks in Japan were wiped out last night, with the Nikkei 225 falling 12.4% and suffering its biggest single-day decline since the Black Monday collapse of 1987 as investors dumped risky trades and fled to safe-haven assets.
Benchmark 10-year Treasury note yields hit a mid-2023 high of 3.723% in overnight trading, and were last marked 5 basis points lower from their Friday close at 3.741% heading into the New York session.
Wall Street's fear gauge, meanwhile, surged more than 125% in after-hours trading to the highest level since the depths of the pandemic, with the CBOE Group's VIX index last marked at $41.89.
That level suggests traders expect the S&P 500 to endure daily moves of around 115 points each day for the next 30 days, more than triple the volatility price into markets in early July.
U.S stocks Monday are facing one of their biggest single-day declines since the pandemic, amid a global market meltdown triggered by recession fears.
"It feels like the perfect storm triggered by the Fed rate decision last week followed by a US jobs report that recalibrated the market’s assessment of a recession," Saxo Bank strategists wrote. "This was the trigger. The rest is mechanical trading decisions based on risk."
"The turmoil will give the long-term investor some excellent opportunities which we will write about this week," they added.
Concerns that a U.S. recession, tied to a Fed policy error that left rates too high for too long, is also hammering global oil prices, have Brent crude-oil contracts falling to the lowest levels since late spring.
The U.S. oil-pricing benchmark, WTI futures, which is tightly linked to domestic gasoline prices, were marked $1.31 lower at $72.21 a barrel for September delivery.
The Fed left its benchmark lending rate unchanged at between 5.25% and 5.5% last week, and wouldn't commit to a September rate cut. The decision came just days before a weaker-than-expected reading for July manufacturing activity and softer jobs-market data that included the highest unemployment rate in four years.
Markets were also on edge amid rising military tensions in the Middle East. U.S. officials are urging Americans to leave Lebanon and Israel is bracing for a possible retaliatory attack from Iran and Hezbollah following the killing of a senior Hamas leader last week in Tehran.
On Wall Street, tech stocks look set to take the brunt of the expected selloff, with futures contracts tied to the Nasdaq suggesting a 770-point plunge at the start of trading.
Futures tied to the S&P 500, meanwhile, are priced for a 140-point decline while the Dow Jones Industrial Average is called 690 points lower to kick off the week.
Apple ( AAPL ) shares were a notable premarket decliner, falling 8.44% to $201.30 following news over the weekend that the billionaire investor Warren Buffett had dumped nearly half his stake in the tech giant last quarter.
In Europe, the regionwide Stoxx 600 was marked 2.6% lower in Frankfurt, while Britain's FTSE 100 slumped 2.2% in London.
Overnight in Asia, Japan's Nikkei 225 lead a regional slump that pulled the MSCI ex-Japan benchmark 4.11% lower into the close of trading with stocks in Tokyo tumbling into bear market territory following Monday's meltdown.
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