Stocks tumbled Monday morning as growing concerns about the strength of the U.S. economy and the outlook for microchip production rattled Wall Street.
The Dow Jones Industrial Average opened with a loss of 1,100 points on Monday, falling 2.8% after the opening bell. Dow futures fell more than 1,200 points before the market opened on Monday.
The tech-heavy Nasdaq index tumbled 6.2 percent and the S&P 500 index tumbled 4.2 percent after the market opened.
“The U.S. is the engine of the global economic train and growing concern about a slowdown, or possible recession, has markets around the world in turmoil,” wrote Greg McBride, chief financial analyst at Bankrate, in a Monday analysis. .
Global markets have been in retreat since Friday after the July federal jobs report was much weaker than expected.
The US added just 114,000 jobs in July and the unemployment rate rose to 4.3 percent, according to the Labor Department, falling short of the 175,000 new jobs and the 4.1 percent unemployment rate projected by economists.
The July jobs report also followed a series of lackluster second-quarter earnings reports from major companies, including chipmaker Intel, which announced plans to reduce its workforce.
And Berkshire Hathaway Chairman Warren Buffett cut his holdings of Apple shares by nearly half, triggering deeper alarm about the prospects for technology companies.
“While Friday’s jobs report was disappointing, it was not the only worrying economic indicator, just the most recent,” McBride said.
“Add economic concerns to the cacophony of earnings disappointments and weak business prospects, global unrest and currency swings and you have a recipe for sudden volatility.”
July’s weak jobs numbers fueled concern among investors and some policymakers that the Federal Reserve – which refused to cut interest rates on Wednesday – should have already done so after months of cooling inflation.
“Fed Chairman [Jerome] Powell made a serious mistake by not cutting interest rates,” Sen. Elizabeth Warren (D-Mass.) said in a Friday post on X.
“He has been warned repeatedly that waiting too long risks sending the economy into a ditch.”
Top U.S. economic policymakers sought to reassure the public on Monday that the market sell-off was not cause for broader alarm about an economic recession.
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said the U.S. does not appear to be in a recession, but acknowledged that the Fed’s current interest rate range may be too high.
“Let’s not overreact to the one-month number, but if this is a sign of something that’s happening over the longer term, then we should respond to what those forces are,” Goolsbee told CNBC’s “Squawk Box” on Monday morning. fair, referring to the July jobs report.
“We are very restrictive, and you would only want to be that restrictive if you think the economy is overheating.”
McBride also urged caution amid market volatility.
“Individual investors should be reminded that market volatility is common and a 10% pullback tends to happen, on average, every 12 months or so,” he said.
The settlement comes about three months before elections, in which the economy is expected to play a significant role.
Former President Trump seized on Sunday night’s news, blaming President Biden and Vice President Harris.
Harris, who won the Democratic presidential nomination last week, was already facing the challenge of selling the administration’s economic record. Despite three years of record job gains and strong economic growth, high inflation has hurt many U.S. families — and their views on Biden’s handling of the economy.
Updated at 9:39 am
This story originally appeared on thehill.com read the full story
