U.S. Stocks Bounce Back Following Global Sell-Off Over Recession Fears

Global stocks experienced a rebound on Tuesday (August 6), following a significant sell-off the previous day that was triggered by fears of a potential U.S. recession. The Nikkei 225 in Tokyo saw a 10% rebound overnight, providing an initial sense of relief after the index's 12.4% drop on Monday, its largest daily sell-off since the 1987 Black Monday crash.

In the U.S., the Dow Jones Industrial Average snapped a three-day losing streak, closing up 294 points. The S&P 500 closed the day ahead by 53 points after falling 3% on Monday, its sharpest daily decline since September 2022. The technology-heavy Nasdaq posted a similarly solid gain, closing 166 points in the black. Shares of the chip-making giant Nvidia, which tumbled as much as 10% on Monday, rose more than 6%. All of the major sectors in the S&P 500 were up, a reversal from broad-based declines on Monday.

"The statistics from yesterday's sell-off had the feel of the 'sell now, ask questions later' kind of day where everything and anything is piling on to reasons for selling," said Quincy Krosby , chief global strategist at LPL Financial, an investment adviser, per the New York Times .

In Europe, markets fluctuated between small gains and losses. The Stoxx 600 climbed 0.29%, while the U.K.'s FTSE 100 and Germany's DAX indexes also posted gains.

Despite the rebound, the market remains volatile , and investors are closely watching for signs of a potential recession. Federal Reserve officials sought to reassure markets, with San Francisco Fed President Mary Daly saying it was "extremely important" to prevent the labor market tipping into a downturn. Daly said her mind was open to cutting interest rates as necessary and policy needed to be proactive.