Wall Street’s major indexes suffered significant losses on Monday, fueled by mounting concerns about a potential U.S. recession following disappointing economic data from last week. The Dow Jones Industrial Average plummeted more than 1,100 points shortly after the opening bell, while the tech-heavy Nasdaq Composite tumbled nearly 5%, entering correction territory for the second time in recent weeks.
These sharp declines were mirrored by a global sell-off. The Nikkei 225 in Tokyo experienced its steepest drop since the notorious “Black Monday” crash of 1987, plunging 12.4%. European markets also faced substantial losses, with the pan-European STOXX 600 index falling 2.6% to 487.15 points—its lowest level since February 13.
Leading tech giants bore the brunt of the early Monday losses. Nvidia, Meta, and Apple each saw their stock values drop by around 6%. Apple, in particular, continued to reel from news that billionaire investor Warren Buffett had reduced his stake in the company by 50%, though Buffett’s Berkshire Hathaway remains Apple’s largest shareholder.
Cryptocurrencies were not spared from the market turmoil. Bitcoin’s value dropped over 17%, while Ethereum fell more than 21%, wiping out $1.79 trillion from the global digital currency market in just 24 hours.
The latest jobs report, which revealed slower-than-expected hiring, has heightened fears of an impending recession. Investment banking giant Goldman Sachs increased its forecast for a recession next year from 15% to 25%, though it stressed that the risk remains “limited.”
This weak jobs data and the subsequent global stock sell-off have led some analysts to anticipate that the Federal Reserve may implement emergency interest rate cuts to stimulate the economy. A recession would disrupt the Fed’s strategy of a gradual rate reduction aimed at achieving a “soft landing.” Critics argue that the Fed has been slow to cut rates despite early signs of cooling inflation, potentially exacerbating economic challenges for lower-income households.
Paul Donovan, a UBS economist, criticized the Fed’s delay in a client note, stating, “The policy error is making things worse for lower-income households.” Currently, futures markets are predicting a 78% chance of the Fed cutting rates by at least 50 basis points in September, with expectations of further reductions totaling 122 basis points by year-end and rates potentially falling to around 3.0% by the end of 2025.
Despite the dramatic market downturn, Dan Ives, managing director and senior equity research analyst at Wedbush Securities, advised against panic. He suggested that the current sell-off represents a “massive fear panic” and urged investors to view the situation as a potential opportunity rather than a cause for alarm.