The stock market rout that started in Japan and travelled all around the world, has made the US stock markets crash too in the early morning trade. The Dow Jones Industrial was down by over 1000 points at one time. Overall, the Dow Jones was down over 2.5%, the Nasdaq, which is full of tech stocks, crashed 3.8% and the S&P 500 plunged over 3.1%, just before 10:00 a.m. Eastern Standard Time.
Why stock markets crashed
The immediate cause? There is widespread fear among investors that the US is heading for a recession as is being figured out from the latest payroll data. The unemployment rate is at a new high of 4.3% in July. Even the US Fed chair’s reassurances of an interest rate cut in September has not brought relief. Feeling is of “too little, too late”. Another factor roiling the market is that the much-hyped AI bets may not be as solid as earlier believed. The AI hype is unravelling swiftly, many believe. However, it was the Bank of Japan that set the entire thing rolling with an interest rate hike last week. And adding to all the negativity have been US Inc quarterly results, with none showing really encouraging signs of revival.
Market impact
The impact on the markets was astonishing. The Dow Jones plunged over 1000 points at one point. And not just US stock markets, the markets in Japan hit the worst day since 1987 and fell as much as 12.7% today. South Korea’’s Kospi has dropped as much as 8.8%.
Even cryptocurrency Bitcoin was awash in red, having shed as much as 12%.
The darling of tech investors, Nvidia shares plunged as much as 8%! Investors are perhaps believing that the hype around its AI chips was a bit exagerrated.
Apple shares dropped over 4.5%, but it is unclear whether this was because of Oracle of Omaha, Warren Buffett selling of half of Berkshire’s stock-holding in the company or due the other reasons elaborated upon above.
Gold price shock
Surprisingly, even gold price was plunging. Generally, when stock markets crash, gold price rises as investors turn from the former to the latter for safety. This may be because they think gold is overpriced too and instead, they are rushing towards the safety that bonds offer. Gold price fell over 2%.
Vix – Fear gauge hits all-time high
The Wall Street fear gauge, the Vix recorded its biggest intraday fall, in terms of percentage today, before rolling itself back up a little.
Buying opportunity?
Does this stock market offer a buying opportunity? The jury is still out on that one and most experts are saying wait and watch as things may get worse before they get better.
US stock market crash has seen Dow Jones plunge by as much as 1000 points today, Nasdaq and S&P 500 are on their knees too. Vix fear index hit an all-time high. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
