Dow sinks more than 1,000 points in global market sell-off

Aug. 5 (UPI) -- Wall Street suffered its worst day since 2022 on Monday as the Dow Jones Industrial Average plunged 1,034 points, the S&P 500 lost $1.3 trillion in market value and the Nasdaq Composite dropped 3.4% over fears of a U.S. recession.

Wall Street witnessed its worst August start in more than two decades, according to Dow Jones Market Data, as Monday also marked the 15th time the Dow dropped more than 1,000 points in a single session, according to FactSet data.

Fidelity, E-Trade and Robinhood all experienced technical difficulties as investors raced to sell stocks.

Tech stocks led Monday's sell-off on the Nasdaq. Apple was down nearly 5% to close at $209.27, while Nvidia was down more than 6%, falling to $100.45 per share. Online retail giant Amazon was down 4.10% to close at $161.02 as Meta Platforms Inc. saw a drop of 2.54% to end the session at $475.73.

Oil prices also fell with the U.S. benchmark, West Texas Intermediate crude futures, closing at $72.94 a barrel. And. the U.S. dollar slid to an eight-month low Monday of 102.18.

Monday's big sell-off comes amid fears of a U.S. recession after Friday's poor jobs report that showed the U.S. created 114,000 jobs for the month of July, far fewer than the expected 185,000 jobs. The unemployment rate also increased to 4.3%, which is its highest level since the COVID-19 pandemic, as the Federal Reserve considers cutting interest rates next month.

Mortgage rates fell sharply as the 10-year Treasury yield, which is considered the key benchmark for mortgage rates, also dropped on Friday's weaker jobs report. By Monday, the average 30-year fixed mortgage rate was 6.324%, which is the lowest level this year, according to Mortgage News Daily.

"If there is an August buyer, should they wait for the next Fed meeting? I'm going to say absolutely not," said Phil Crescenzo, a vice president at Nation One Mortgage Corporation.

Ahead of Monday's opening trading session on Wall Street, U.S. futures plunged with Dow futures down more than 800 points, on top of a 600-point drop Friday.

The S&P was down 3% and Nasdaq-100 futures down 4% as tech stocks took a hammering led by Apple after Warren Buffet 's Berkshire Hathaway revealed it had dumped half its stake in the iPhone maker.

Meanwhile, European stock markets opened sharply lower Monday after Japan's benchmark Nikkei 225 index saw its biggest-ever sell-off, ending the day in Tokyo down 4,451.28 points after investors spooked by fears of a U.S. recession dumped shares.

The main indexes of Germany and France -- the DAX and the CAC 40 -- both dropped by almost 3% as soon as trading got underway while in London, the benchmark FTSE 100 index fell 168 points, or 2.19%, its biggest fall in a year.

The pan-European Stoxx 600 index was off 2.6% with all sectors affected , led by tech, energy, carmaker and mining stocks.

The euro and pound, however, both strengthened against the dollar after a weak U.S. jobs report from the Labor Department on Friday triggered fears of an economic downturn in the world's largest economy that sent all three major U.S. indices into a tailspin.

However, on Monday during a CNBC interview, Chicago Federal Reserve President Austan Goolsbee acknowledged July's jobs report was "weaker than expected" but indicated that it is "not looking yet like recession."

This came on top of a Fed Reserve decision on Wednesday to keep interest rates on hold at 5.25%-5.50% with the disappointing payroll data suggesting the U.S. central bank had left it too long to start cutting rates.

"Across almost all key risk markets, valuations are adjusting to a growing fear that the Fed has left it too late to begin the process of neutralizing its tight monetary policy," Kallum Pickering, chief economist at Peel Hunt told The Telegraph .

"The United States is the world's most systemically important economy. Downside surprises there could have far-reaching consequences for open economies and may influence the upcoming decisions of global central banks."

The European selling was sparked by a crash that saw the Nikkei slump from Friday's 35,249.36 point-close to bottom out at 31,156.12 just before the market closed Monday afternoon before recovering slightly to 31,458.42, down 12.4%, with markets in China, Hong Kong, Taiwan, South Korea, India and Australia following suit .

The Topix, the Japanese equivalent of the S&P 500, fell more than 12% with the country's big industrials including Mitsui, Mitsubishi and Sumitomo all falling by more than 14%.

Nikkei and Topix futures trading was temporarily paused at the Osaka Securities Exchange after circuit-breakers kicked in to arrest panic selling.

The Bank of Japan lit the match Wednesday by raising interest rates for only the second time in nearly two decades -- from 0.1% to 0.25% -- and signalling there would be more hikes to follow, triggering two days of selling going into the weekend that saw the Nikkei lose more than 3,000 points.

However, Nomura Securities chief strategist Naka Matsuzawa said the sell-off had to be seen in the context of growing "risk-off" sentiment, with most of the selling by foreign investors worried about the U.S. economy.

"The fall is not really happening due to Japan-specific reasons," he explained warning that there may be more selling to come.

"Markets are still trying to find the bottom."

While some economists warn of a U.S. recession, other investors claim the market is overreacting to economic data and argue that Monday's sell-off could mean buying opportunities.

"Evidence certainly points to a slowing economy. But slowing and slow are two very different points," Jack Janasiewicz, lead portfolio strategist at Natixis Investment Managers, wrote in a Friday note.

"Lower prices certainly can have a massive psychological effect. But investors need to step back and look at the fundamental story, which still remains decent."