US futures tumble as recession fears grip investors
By Reuters, August 5, 2024US stock index futures tumbled on Monday, with those tied to the Nasdaq falling nearly 4%, as fears of the United States slipping into a recession rippled through global markets.
Stock markets from Asia to Europe took a beating, and bond yields slid as investors rushed to safe-haven assets and bet the US Federal Reserve would need to cut interest rates quickly to spur growth.
All megacap and growth stocks, the main drivers for the indexes hitting record highs earlier this year, fell sharply in premarket trading.
Apple Inc (AAPL.O), slumped 7.3% after Berkshire Hathaway (BRKa.N), slashed its stake in the iPhone maker by almost 50%, suggesting that billionaire investor Warren Buffett is growing wary about the broader US economy or stock market valuations that have gotten too high.
Nvidia (NVDA.O), opens new tab fell 6.8% after reports of a delay in the launch of its upcoming artificial intelligence chips due to design flaws.
At 4:33 a.m. ET, Dow e-minis were down 613 points, or 1.54%, S&P 500 e-minis were down 117.5 points, or 2.19%, and Nasdaq 100 e-minis were down 644.75 points, or 3.47%.
A weak jobs report and shrinking manufacturing activity in the world’s largest economy, coupled with dismal forecasts from the big technology firms, pushed the Nasdaq 100 (.NDX), and Nasdaq Composite (.IXIC), opens new tab into a correction last week.
The weak jobs data also triggered what is known as the “Sahm Rule,” seen by many as a historically accurate recession indicator.
The data prompted traders to assign a 91.5% probability that the US central bank will cut the benchmark rates by 50 basis points in the September meeting and see year-end rates at 4-4.25% from the current 5.25%-5.50%, according to CME’s FedWatch Tool.
Big Wall Street brokerages also revised their Fed rate projections for 2024 to show greater policy easing by the central bank.