Dow pulled back an enormous 1033 (close to session lows), decliners over advancers by a whopping 95% & NAZ lost 576 (in correction territory). The MLP index finished down 7+ to the 273s & the REIT index sank about 12+ to the 398s. Junk bond funds were sold & Treasuries had minimal buying which took yields slightly lower. Oil was off chumpchange in the 73s & gold retreated 24 to 2448 (more on both below).
Dow Jones Industrials
As US markets opened for trading today, tech's megacap companies lost about $1T in market cap, deepening a downturn that sent the NAZ into correction territory last week. Nvidia (NVDA) shed more than $300B in market cap at the opening bell, though it quickly recovered about ½ of its loss. Apple (AAPL), a Dow stock, & Amazon's (AMZN) valuation plummeted $224B & $109B, respectively, at the market open. Add all that to steep declines in Meta (META), Microsoft (MSFT), a Dow stock, & Tesla (TSLA), & the 7 most-valuable tech companies lost $995B in the early moments of trading. But they bounced back some as trading progressed. Markets fell broadly as concerns about a recession stemming from disappointing economic data last week pushed Japan's Nikkei 225 down 12% its worst day since the 1987 “Black Monday” crash. Bitcoin plummeted 11%, leading a sell-off in cryptocurrency & related stocks. Within technology, investors have been getting nervous for weeks. NAZ slumped 3.4% last week, wrapping up its worst 3-week stretch in 2 years. AMZN, Alphabet (GOOG) & MSFT all gave reasons for concern in their reports, contributing to a slide among their peers. It is a sharp change from a few months ago, when investors cheered as Meta CEO Mark Zuckedrberg & GOOG CEO Sundar Pichai said their companies were spending heavily to build out their artificial intelligence infrastructure. NVDA, a company unknown to most Americans, was the biggest beneficiary due to its graphics processing units, or GPUs, powering the AI boom. The company surpassed $3T in market cap & briefly passed MSFT & AAPL to become the world's most valuable company. Its market cap now sits below $2.5T. Some analysts have been sounding the alarm of late regarding a potential overinvestment in AI. A widely read Goldman Sachs note from Jun warned that the biggest-spending companies had little to show for their AI expenditures. Elliott Management, one of the largest hedge funds in the world, reportedly told clients that NVDA was in a “bubble” & the AI frenzy was “overhyped.”
$1 trillion wipeout: Market rout punishes megacap tech
Today's sell-off intensified in a major way as concerns mounted over the health of the US economy. The Dow fell around 900 points & NAZ was crushed roughly 3% after the tech-heavy index entered into a correction with Fri's sharp losses. The S&P 500 losses cascaded about 2.5%. The "fear gauge" — the CBOE Volatility Index — soared, reaching its highest level since the early days of the COVID-19 pandemic in Mar 2020. Treasury yields plummeted, with the benchmark 10-year Treasury yield hovering near 3.8%. The global stock market is in the midst of a rapidly intensifying sell-off after Fri's lackluster US jobs report added to concerns about the economy & on whether the Federal Reserve had waited too long to begin cutting interest rates. Of note, almost 100% of bets are on the central bank to cut rates by 0.5% by its Sep meeting, according to the CME FedWatch tool. Some of the biggest companies in the stock market saw their values plummet at the open. AAPL declined 4% amid the sell-off and news that Berkshire Hathaway (BRK) had cut its stake in the company in ½. NVDA's pullback continued, as it dropped as much as 13% before paring some of its losses & TSLA fell more than 3%. Crypto also took a beating, with bitcoin sinking more than 8% to creep back toward the $54K level. The concerns have spread throughout the world, as well. Traders in Asia greeted the week with a similar sell-off, as Japan's Nikkei 225 was routed by more than 12% in its biggest-ever daily loss after a surprise interest rate hike from the Bank of Japan last week. The sharp rise in the Japanese ¥ against the $ has spurred heavy selling as speculators who had borrowed money at Japan's near-0% interest rate to buy US risk assets have been liquidating their holdings. The US market is headed into a quieter week of data & earnings. With the jobs market still in focus, weekly unemployment claims due Thurs will take a bigger spotlight than usual. All of the S&P 500 sectors were in red territory today with Technology stocks leading to the downside. Consumer Discretionary & Communications Services also declined. The Russell 2000 small caps index also declined more than 3%.
Stock sell-off intensifies as Dow plummets, tech sinks
Shares of Kellanova (K) climbed 13% in morning trading on reports of buyout interest. M&M’s owner Mars is in talks to acquire the snacking company, adding rival candy company Hershey (HSY) is also potentially interested in buying the company. Kellanova spokesperson Kris Bahner declined to comment. 10 months ago, Kellogg spun off its cereal business, naming the new company WK Kellogg in honor of its founder. The remaining business unit, renamed
Kellanova, contained Pringles & Cheez-It and its North American frozen
food unit, which includes Morningstar Farms. Including today's stock move, Kellanova has a market value of nearly $25B. Kellanova stock jumped 9.61 (15%).
Kellanova stock climbs on reports of potential sale to M&M’s owner Mars
Gold fell more than 1%, caught in the slipstream of a global, wider market sell-off driven by mounting economic concerns, although analysts said this would be a temporary correction for the safe haven. After dropping as much as 3.2% earlier in the session, spot gold pared some losses to trade 1.6% lower at $2404 an ounce & US gold futures settled 1% lower at $2444. The stock market tumbled, as fears of the US tipping into recession following weak economic data last week rippled thru global markets.
Gold Slips Over 1% As Wider Market Rout Spills Over
A global financial market rout has pressured oil to fresh 7-month lows, with traders weighing continued signs of global economic slowdown. Brent futures settled above $76 a barrel, the lowest level since Jan. Traders fled risk assets as a stock market meltdown worsened today. The declines come as traders fret about the health of the global economy, though US equity markets moved away from their lows as the trading session progressed. Still, the selloff may have run its course as technical signals including the relative strength index show prices are at oversold levels. Oil has notched 4 weeks of declines on signals of faltering demand in the US & China, with the Asian nation rolling out plans to spur domestic consumption over the weekend. OPEC+ supply cuts & concerns that the conflict in the Middle East could impact production from the region had supported prices as traders brace for a possible attack from Iran & regional allies against Israel. WTI for Sep fell 58¢ to settle at $72.94 a barrel & Brent for Oct settlement dropped 51¢ to settle at $76.30 a barrel.
Oil Slumps to Fresh Seven-Month Low Amid Global Financial Rout
Investors will long remember today. Stocks began trading in the dumps & remained at depressed levels for the entire session. There are plenty of economic reports & it seems like they are all pointing negative. So stocks were heavily sold. Overnight, nerves need to be calmed. It may be difficult, but this is the time to research stocks that fallen or are falling towards buying prices for future acquisition. 😀
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