Dow drops 900 points, Nasdaq craters 4pc in global market rout:

US stocks fell sharply on Monday as part of a global market sell-off centred around US recession fears. Japan’s Nikkei 225 plunged 12 per cent in its worst day since the 1987 Black Monday crash for Wall Street.

The Dow Jones Industrial Average dropped 926 points, or 2.3 per cent. The Nasdaq Composite lost 3.9 per cent, and the S&P 500 slid 3 per cent. The blue-chip Dow earlier fell as much as 1200 points before a slight bounce back on a better-than-expected services PCI reading for July.

Fears of a US recession were the main culprit for the global market meltdown after Friday’s disappointing July jobs report. Investors are also concerned that the Federal Reserve is behind in cutting interest rates to bolster an economic slowdown, with the central bank choosing instead to keep rates at the highest in two decades last week.

Investors are continuing to sell off megacap tech stocks and the once-hot artificial intelligence trade. Tech shares were among the worst performers Monday:

• Nvidia tumbled more than 5 per cent Monday after going into the session already down more than 23 per cent from its recent high.
• Apple cratered nearly 4.6 per cent after Warren Buffett’s Berkshire Hathaway cut its stake in the iPhone-maker in half.
• Other losers included Tesla, down 10 per cent, and Broadcom and Super Micro Computer down 7 per cent and 12 per cent, respectively.

In Asia overnight, Japan stocks confirmed a bear market as Asia-Pacific investors had their first chance to react to the sour jobs figures in the US from Friday. The 12.4 per cent loss on the Nikkei — which closed at 31,458.42 — was the worst day for the index since the Black Monday of 1987 hit Wall Street. The loss of 4451.28 points on the index was also the largest in terms of points in its entire history. The Dow lost more than 22% in a single day on Black Monday.

Other global markets were also severely impacted:

• US Treasury yields tumbled on the recession fears and as investors flooded into bonds for a global safe haven. Bond prices move inversely to yields. The benchmark 10-year note on Monday yielded 3.7 per cent.
• Bitcoin tumbled from nearly $US62,000 Friday to around $US52,000 on Monday.
• Europe’s Stoxx 600 was off by 3 per cent.
• The CBOE Volatility Index was last trading at 46, after reaching as high as 53, its highest level since the early days of the pandemic in 2020.

There is also chatter about the unwind of yen “carry trade” adding fuel to the global market decline after the Bank of Japan raised interest rates last week, reducing the interest rate differential between Japan and the US. That has has contributed to the yen rising in value versus. the dollar, ending a practice of traders borrowing in the cheap currency to buy other global assets.

“It’s painful,” said Victoria Greene, chief investment officer at G Squared Private Wealth on CNBC’s Worldwide Exchange.

“I think there’s a lot being absorbed that happened over the weekend between Berkshire cutting Apple...you had the Japan sell-off... you have the yen spike and the end of that carry trade...You have a lot of bad news getting priced in.

“This is a pullback, a correction,” she added. “We’ll probably hit oversold at some point...rather quickly at these levels.”

Chicago Fed President Austan Goolsbee, while avoiding commitment to a specific course of action, indicated that interest rates at their current level may be too “restrictive” on CNBC’s Squawk Box on Monday.

If economic conditions meaningfully deteriorate, the central bank will “fix it,” Goolsbee added.

On Friday, the Nasdaq capped a third straight week of losses, bringing the tech-heavy index down more than 10 per cent from a record set last month. The S&P 500 also posted a third straight losing week, and the Dow Jones Industrial Average, which had been outperforming, snapped a four-week win streak.

ISM services PMI beats expectations

The US services sector expanded at a faster-than-expected pace in July, providing a respite of positive economic news to counter fears of a looming recession.

The ISM services index registered a 51.4 per cent reading for the month, representing the share of purchase managers reporting expansion. That is up from 48.8 per cent in June and better than the Dow Jones estimate for 50.9 per cent.

Other areas of the PMI survey also showed positive signs. The employment index rose 5 points, coming out of contraction for a reading of 51.1 per cent. In addition, the business activity and new orders indexes also came out of contraction while inventories, new orders and backlogs all saw sharp gains.

A disappointing ISM manufacturing reading last week helped generate the current sharp sell-off on Wall Street.

Bitcoin and ether trim losses at the open

Bitcoin and ether traded off their lows at the stock market open.

The price of the flagship cryptocurrency was last lower by 10 per cent, and ether was down more than 13 per cent. Earlier in the morning, they traded as low as 17 per cent and 22 per cent, respectively.

Crypto stocks pared losses as well but were still deep in the red. Coinbase was last down 7 per cent and MicroStrategy is lower by 12 per cent.

Bitcoin exchange-traded funds, including the Grayscale Bitcoin ETF and the iShares Bitcoin Trust, were down more than 14 per cent across the board.

Nasdaq Composite falls below 200-day moving average

The Nasdaq Composite on Monday dropped below its 200-day moving average of 15,823.30, falling below the long-term trend indicator on an intraday basis for the first time since October 31, 2023.

The benchmark’s last close below the 200-day moving average was October 30, 2023.

Stocks open sharply lower

US stocks opened in the red on Monday.

The Dow Jones Industrial Average declined 1103 points, or 2.8 per cent.

The S&P 500 dropped 225 points, or 4.2 per cent, while the Nasdaq Composite tumbled 6.3 per cent.

Wall Street’s ‘fear gauge’ continues to climb

The Cboe Volatility Index, or VIX, rose to 65 on Monday morning after trading near 23 on Friday.

The index, often referred to as Wall Street’s “fear gauge,” is now at its highest level since March 2020. The VIX is a measure of expected volatility over the next 30 days based on market pricing of S&P 500 options.

Artificial intelligence stocks drop, Nvidia sheds more than 13pc

Stocks tied to the artificial intelligence trade dropped Monday as fears of a US recession fuelled a sell-off on Wall Street.

Nvidia and Super Micro Computer led the losses, falling about 14 per cent each. Advanced Micro Devices, Meta Platforms and Amazon dropped 8 per cent each, while Microsoft and Alphabet declined about 6 per cent.

Wharton’s Jeremy Siegel calls for emergency Fed rate cut

Jeremy Siegel, Wharton professor emeritus of finance and chief economist at WisdomTree, called on the Federal Reserve to make an emergency 75 basis-point cut in the federal funds rate.

There should be another 75 basis-point cut indicated for the September meeting, at minimum, he told CNBC’s Squawk Box.

“The fed funds rate right now should be somewhere between 3.5 per cent and 4 per cent,” Siegel said.

Apple shares crater after Warren Buffett slashes stake by half

Warren Buffett stunned many on Wall Street after Berkshire Hathaway revealed it had slashed its big Apple stake by half in the second quarter.

Berkshire Hathaway disclosed in its earnings filing over the weekend that its Apple holding was valued at $US84.2 billion at the end of the second quarter, indicating that the Oracle of Omaha dumped a little more than 49 per cent of the tech stake.

The 93-year-old legendary investor has been on a massive selling spree, offloading more than $US75 billion in equities in the second quarter and raising Berkshire’s cash pile to a whopping $US277 billion, an all-time high for the conglomerate.

Shares of Apple dropped more than 8 per cent in premarket trading Monday amid an intensifying global sell-off.

Gold prices decline amid volatile market on Monday

Gold prices fell as the markets digest the Nikkei 225′s 12 per cent drop and a sharp tumble in US stock futures on Monday. The move downward bucked gold’s reputation as a safe-haven trend — typically during global market turmoil, gold prices move higher as investors seek to hedge against volatility.

Gold futures shed 1.6 per cent to $US2431.50. Spot gold pulled back 2.2 per cent to $US2390.75.

Crypto stocks fall double digits as Bitcoin tumbles below $US50,000

Crypto stocks were among the hardest hit Monday morning as the price of bitcoin dropped below $US50,000 for the first time since February.

Coinbase slid 13 per cent, while MicroStrategy tumbled 17 per cent. Marathon Digital lost 13 per cent and other miners were down double digits as well.

Bitcoin sank more than 13 per cent on Monday to $US50,963.57, according to Coin Metrics. At one point, it fell to $US49,111.10, its lowest level since February. It has lost nearly 18 per cent since Saturday.

“Thirty percent slumps, as scary as they are, are par for the course during bull markets and it’s encouraging bitcoin bounced back above $50,000,” said Nexo co-founder Antoni Trenchev.

“But make no mistake, we are in a choppy, volatile market environment … the moment to turn bullish will be when bitcoin retakes its 200-day moving average, which typically tells us if we are in a bull or bear market, at $US61,500.”

Here’s how investors are reacting to the market sell-off

US futures are tumbling. Japan’s Nikkei 225 dropped 12.4 per cent on Monday in the index’s worst day since 1987. Here is how some Wall Street investors are reacting to the sell-off.

In a Sunday note, Evercore ISI Chairman Ed Hyman acknowledged that signs of a recession are beginning to become harder to ignore.

“With the soft employment report, the NASDAQ correction, the plunge in bond yields, and the plunge in commodity prices, it’s possible we’re seeing recession signals coming home to roost,” he wrote.

Vital Knowledge’s Adam Crisafulli blamed some of the sell-off on investors unwinding some of their positioning in the year’s top tech winners. But even against this market pullback, investors cautioned against turning too bearish too fast.

“This is not the time to panic in our opinion,” Wedbush analyst Dan Ives told CNBC on Monday morning. “It’s not the time to hit the exit buttons.”

Asia stock rout

Japan stocks confirmed a bear market on Monday as Asia-Pacific markets continued the sell-off from last week.

The 12.4 per cent loss on the Nikkei, which saw it close at 31,458.42, was the worst day for the index since the Black Monday of 1987. The loss of 4451.28 points on the index was also the largest in terms of points in its entire history.

Heavyweight trading houses such as Mitsubishi, Mitsui and Co., Sumitomo and Marubeni all plunged around 10 per cent.

South Korea’s Kospi fell 8.1 per cent before trading was halted for 20 minutes from 2.14 p.m. Seoul time due to the exchange’s circuit breakers.

Corporate earnings season continues

The second-quarter earnings season has had a solid scorecard thus far. Of the 75 per cent of S&P 500 companies that have reported earnings, 78 per cent have posted positive surprises, according to FactSet data. According to FactSet’s John Butters, that is above the five-year average of 77 per cent.

Meanwhile, the S&P 500 blended earnings growth rate — which includes actual results, as well as estimates for companies that have yet to report — was 11.5 per cent. According to Butters, that would mark the highest earnings growth since the fourth quarter of 2021.

Still, corporate earnings season continues this week with some notable names that include the Walt Disney Company, Caterpillar, Costco, Eli Lilly and Super Micro Computer.

On Monday, investors can expect results from companies such as Simon Property Group, Diamondback Energy and Tyson Foods.

Stock futures open lower

US stock futures opened lower Sunday night.

Dow Jones Industrial Average futures fell 221 points, or 0.6 per cent. S&P 500 futures and Nasdaq-100 futures dipped 0.9 per cent and 1.2 per cent, respectively.