How did we go from euphoria in the US economy to complete chaos so quickly؟
US indices, as well as US stock futures, fell significantly after a painful week on Wall Street.
Stocks fell on Friday after a weaker-than-expected jobs report raised concerns about economic growth, which followed the Fed's signals last Wednesday that it may cut interest rates at its September meeting, and Powell's promotion of the soft landing story for months, but investors fear that the cuts will come too late as the risk of recession rises.
All this was due to the increase in the number of non-farm jobs in the United States in July by 114 thousand jobs against the expected 175 thousand, and a slight increase in the participation rate also played a small role in increasing the unemployment rate, since unemployment in the United States is now higher than before the pandemic, which is 4.2%.
The three major indices recorded sharp losses last week, with the S & P 500 down 2.1%, The Dow Jones Industrial Average fell 2.1% for the week, while the Nasdaq Composite dropped 3.4% for the week, and the Nasdaq closed down 10% on Friday alone.
Investors have been hammered as market participants scramble to hedge amid growing panic over interest rates and a looming recession.
Investors may be bracing for more tech stocks to fall on Monday, after Warren Buffett’s Berkshire Hathaway Inc. revealed Saturday that it cut its stake in Apple Inc. by about 50% last quarter.
Tech stocks have been on the decline after some lackluster earnings, especially from chipmaker Intel Corp., which saw its shares fall 26% on Friday after a disappointing earnings report.
Finally, recession fears and concerns that the Federal Reserve may have made a policy mistake have sent investors rushing into safe-haven assets such as U.S. Treasuries and gold this week.
However, some analysts said investors may have overreacted to a string of weaker-than-expected economic data, and last week's sell-off may have been a bit overdone.
