The stock market witnessed a brutal sell-off on Monday, with the Dow Jones Industrial Average plummeting over 1,100 points, or 3.1%, to its worst day since 2022. The S&P 500 and Nasdaq Composite also suffered significant losses, falling 3% and 3.4%, respectively. The global sell-off was triggered by concerns over the health of the US economy, with investors pricing in more interest rate cuts from the Federal Reserve.
Fear Gauge Hits Highest Level Since COVID-19 Pandemic
Wall Street’s “fear gauge” — the CBOE Volatility Index (VIX) — touched its highest level since the early days of the COVID-19 pandemic, before retreating. Treasury yields fell, with the benchmark 10-year Treasury yield hovering near 3.8%.
Big Tech Stocks Take a Hit
Some of the biggest companies in the stock market saw their values plummet. Apple (AAPL) declined about 5% amid the sell-off and news that Berkshire Hathaway (BRK-B) had cut its stake in the company in half. Nvidia (NVDA) pulled back over 6%. Tesla (TSLA) fell more than 4%.
Cryptocurrencies Also Take a Beating
Crypto also took a beating, with bitcoin (BTC-USD) sinking more than 10% to creep back toward the $54,000 level.
Netflix Pullback Creates Buying Opportunity
One analyst thinks the recent retreat in Netflix (NFLX) shares has created a buying opportunity, arguing the company is well positioned to hike subscription prices later this year. The combination of a strong content slate along with potential price increases “could serve as a catalyst for ad tier adoption,” the analyst said, predicting a likely boost to year-end subscribers.
Global Sell-Off Spreads
The concerns spread throughout the world, as well. Traders in Asia greeted the week with a similar sell-off, as Japan’s Nikkei 225 (^N225) 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.
Interest Rate Cuts on the Horizon?
The market is now pricing in more than five interest rate cuts from the Federal Reserve by the end of its January 2025 meeting, with some economists calling for a more aggressive pace of rate cuts to address the rising risks to the economy. However, others argue that the Fed should not overreact to one data point, and that further data is needed to confirm whether the weakness in the July jobs report was an aberration or a trend.
