or Dow fell by 1,033.99 points or 2.6% to close at 38,703.27. THE Nasdaq lost 3.43% to end at 16,200.08 points, while S&P 500 recorded losses of 3% to 5,186.33 points. The blue chip index and the S&P 500 posted their biggest daily losses since September 2022.
The VIX index, which tracks volatility, closed at 38.57, the highest level since October 2020.
Earlier, the stock market in Japan experienced the biggest drop since Black Monday 1987spread concerns in international stock markets.
The salvo was delivered by US jobs data in July that fueled concerns of a serious slowdown in the US economy and increased bets that the Federal Reserve will cut interest rates more than expected at its September meeting. .
Investors continue to liquidate top tech stocks, especially in the artificial intelligence space: Nvidia stock fell 6.4% in Monday’s session, snapping its losses from a 52-week high as high as 29%. Apple sank 4.8%, Tesla 4.2% and Super Micro Computer 2.5%.
It also opened market debate that behind the large liquidations was the destabilization of the carry trade following the decision by the central bank of Japan to raise interest rates last week, narrowing the interest rate differential between Japan and US. This contributed to the rise of the yen against the dollar, leading to the collapse of the strategy where investors borrowed low-yielding currencies like the yen to buy high-yielding currencies like the dollar.
The market is poised for a correction, and the weaker-than-expected jobs data is the only reason for the correction, said Sam Stovall, strategist at CFRA Research. The S&P 500 lost about 8% from its all-time high.
The governor of the regional central bank in Chicago said that if the economic situation worsens significantly, the central bank will correct it.