Last Updated: 4:00 PM EST
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Stock indices plunged in today’s trading after Friday’s jobs report caused investors to start worrying about a recession, and today’s economic news provided little comfort to investors. Indeed, the Nasdaq 100 (NDX), the S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) fell 2.96%, 3%, and 2.6%, respectively.
Earlier today, Markit released its monthly report for the U.S. Services Purchasing Managers’ Index, which measures the activity levels of purchasing managers in the service sector. A number over 50 represents an expansion, whereas anything below 50 means a contraction. The report came in at 55, which was lower than the expected 56 and below last month’s reading of 55.3.
In addition, the Institute for Supply Management put out its monthly report for the ISM Non-Manufacturing Purchasing Managers’ Index, which measures the overall economic condition of the non-manufacturing sector.
Similar to the Services Purchasing Managers’ Index, a number over 50 also represents an expansion, whereas anything below 50 signals a contraction. The report came in at 51.4, in line with expectations and above last month’s reading of 48.8. However, it’s worth noting that this indicator has been in an overall downtrend since peaking in December 2021, when it hit a high of 69.1. If this trend continues, it might not take long before the non-manufacturing sector enters into a period of sustained contraction.
First Published: 5:00 AM EST
U.S. stock futures witnessed sharp declines on Monday morning. The week’s disappointing start can be attributed to several factors, including recession fears, geopolitical risks, and concerns over the lofty valuations of AI stocks. Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and Dow Jones Industrial Average (DJIA) were down by about 3.4%, 2.13%, and 1.47%, respectively, at 4:39 a.m. EST, August 5.
Last week, all major indices posted losses. The tech-heavy Nasdaq Composite and the S&P 500 indices marked their third consecutive week in the red. Also, the Dow Jones snapped a four-week winning streak.
The sell-off came after Friday’s weaker-than-expected U.S. jobs report, which came across as a recession warning signal. Additionally, high valuations following the recent rally in AI stocks have triggered corrections. Further, heightened geopolitical tensions in the Middle East increased the risk-off sentiment.
Adding to the market’s woes, news of Berkshire Hathaway’s (BRK.A) (BRK.B) substantial reduction in its Apple stake further dampened investor sentiment. It is reasonable to expect that traders will closely watch Apple stock (AAPL) price movements in today’s session.
Looking ahead to key economic reports for this week, the U.S. Services Purchasing Managers’ Index (PMI) for July will be released today. Moreover, the Balance of Trade report for June will be made public on Tuesday. In addition, the U.S. consumer credit data is slated to be released on Wednesday.
Furthermore, earnings reports from key companies like Uber (UBER), Airbnb (ABNB), Rivian (RIVN), Disney (DIS), Robinhood (HOOD), Supermicro (SMCI), Datadog (DDOG), and Warner Bros. (WBD) are scheduled for the week. Today, investors will await results from Palantir (PLTR), Lucid (LCID), and Tyson Foods (TSN).
Meanwhile, the U.S. 10-year treasury yield was down, floating near 3.75% at the time of writing, hitting its lowest levels in over a year. Also, the WTI crude oil futures are trending lower, hovering near $72.74 per barrel as of the last check.
Elsewhere, European indices opened lower on Monday morning, reflecting a global market downturn. Concerns over a potential U.S. recession have kept the broader market anxious.
Asia-Pacific Markets Traded Lower on Monday
The Asia-Pacific indices were in the red today, with Japanese indexes witnessing over 12% declines. Importantly, mounting U.S. recession fears and expectations of further rate hikes from the Bank of Japan resulted in the Nikkei index’s worst performance since 1987.
Hong Kong’s Hang Seng index closed 1.46% lower. Also, China’s Shenzhen Component Index and the Shanghai Composite ended down by 1.54% and 1.85%, respectively. Similarly, Japan’s Nikkei and Topix finished lower by 12.4% and 12.23%, respectively.
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