Stocks fall on fears of US recession

Jonathan Hoenig, manager of hedge fund Capitalist Pig, advises investors to focus on what's working in the markets right now, not Big Tech.

Stocks fell on Monday as fears of a U.S. recession sent turmoil through global markets.

The Dow Jones Industrial Average fell 1,300 points, while the Nasdaq Composite and S&P 500 also fell.

A weak jobs report and declining manufacturing activity in the world's largest economy, coupled with gloomy forecasts from big tech companies, pushed the Nasdaq 100 and Nasdaq Composite into a correction last week.

“While Friday’s jobs report was disappointing, it wasn’t the only worrisome economic indicator, just the most recent,” said Greg McBride, Bankrate’s chief financial analyst. “Add economic concerns to the cacophony of earnings disappointments and weak corporate outlooks, global unrest and currency fluctuations, and you have a recipe for sudden volatility.”

Stocks continue to slide as US recession fears rise: Live News

Dow Jones Industrial Average

JULY JOBS REPORT JUST TRIGGERED A RELIABLE RECESSION INDICATOR

The weak jobs data also triggered what's known as the “Sahm ​​rule,” considered by many to be a historically accurate recession indicator.

“The July jobs report is being seen as a recession warning, and markets are reacting accordingly,” said Bill Adams, chief economist at Dallas-based Comerica Bank.

Traders work on the floor of the New York Stock Exchange during afternoon trading on March 27, 2024, in New York City. (Photo by Michael M. Santiago/Getty Images/Getty Images)

With the unemployment rate unexpectedly rising, the so-called Sahm rule is now in effect. Named after former Federal Reserve economist Claudia Sahm, the rule has successfully predicted every recession since 1970.

FED KEEPS INTEREST RATES AT 23-YEAR HIGH, BUT OPENS DOOR TO RATE CUT

Ticker Title Last Change % Change I:DJI DOW JONES AVERAGES 38641.02 -1,096.24 -2.76% SP500 S&P 500 5178.04 -168.52 -3.15% I:COMP NASDAQ COMPOSITE INDEX 16175.982515 -600.18 -3.58%

It states that the economy is in the early stages of a recession when the three-month moving average of the unemployment rate is at least half a percentage point higher than the 12-month low. Over the past three months, the unemployment rate has averaged 4.13%, 0.63 percentage points higher than the 3.5% rate recorded in July 2023, exceeding that threshold.

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Major Wall Street brokerages also revised their Fed rate projections for 2024 to show more easing of central bank policy.

Japanese stocks also fell on Monday, with the Nikkei 225 index closing down more than 12% – 4,451.28 points – in its worst day since 1987.

Cryptocurrencies also fell, with the price of bitcoin falling 17.5% to $50,239 on Monday morning. The price of ethereum fell 23% to $2,230 apiece.

Megan Henney of FOX Business and Reuters contributed to this report.

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