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Wall Street sees significant pullback amid growing recession fears
(MENAFN) On Monday, Wall Street’s main indices experienced significant declines for the second consecutive session as fears of a potential U.S. recession intensified following disappointing economic data. The Dow Jones Industrial Average dropped by 681.07 points, or 1.71 percent, closing at 39,056.19. The Standard & Poor’s 500 Index fell by 195.42 points, or 3.66 percent, ending at 5,151.14, while the Nasdaq Composite Index saw a sharp decline of 1,063.63 points, or 6.34 percent, settling at 15,712.53. The downturn was exacerbated by steep declines in major tech stocks, with Amazon’s shares falling 8.79 percent and Intel’s dropping 26.06 percent following disappointing quarterly results and outlooks.
The Nasdaq Composite Index has now fallen over 10 percent from its peak closing high in July, indicating it has entered correction territory amid concerns over inflated valuations in the context of a weakening economy. The CBOE Volatility Index, known as Wall Street's "fear gauge," surged past its long-term average to reach 29.66—its highest level since March 2023—before closing at 23.39. This spike reflects heightened investor anxiety and uncertainty about future market conditions.
Adding to the market turmoil, the Labor Department’s report on Friday revealed that nonfarm payrolls increased by just 114,000 jobs last month, significantly below the median forecast of 175,000 and short of the 200,000 jobs needed to match population growth. The unemployment rate also edged up to 4.3 percent, nearing a three-year high. These figures have raised concerns that the Federal Reserve may have erred in its decision to maintain interest rates during its recent policy meeting, with expectations for a 50 basis point rate cut in September now surging to 69.5 percent according to CME’s FedWatch tool, up from 22 percent previously.
The Nasdaq Composite Index has now fallen over 10 percent from its peak closing high in July, indicating it has entered correction territory amid concerns over inflated valuations in the context of a weakening economy. The CBOE Volatility Index, known as Wall Street's "fear gauge," surged past its long-term average to reach 29.66—its highest level since March 2023—before closing at 23.39. This spike reflects heightened investor anxiety and uncertainty about future market conditions.
Adding to the market turmoil, the Labor Department’s report on Friday revealed that nonfarm payrolls increased by just 114,000 jobs last month, significantly below the median forecast of 175,000 and short of the 200,000 jobs needed to match population growth. The unemployment rate also edged up to 4.3 percent, nearing a three-year high. These figures have raised concerns that the Federal Reserve may have erred in its decision to maintain interest rates during its recent policy meeting, with expectations for a 50 basis point rate cut in September now surging to 69.5 percent according to CME’s FedWatch tool, up from 22 percent previously.
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