Wall Street tumbles as recession fears grip markets
Main indices on Wall Street in the USA recorded declines at the opening of Monday's session. The Dow Jones index fell by 1.71%, the Nasdaq by 6.34%, and the S&P 500 by 3.66%. Experts are raising the alarm.
At Monday's opening on Wall Street, the Dow Jones Industrial Average fell by 681 points, or 1.71%, to 39,056 points. The S&P 500 opened lower by 195 points, or 3.66%, at 5,151 points. Meanwhile, the Nasdaq Composite fell by 1,064, or 6.34%, to 15,713 points.
Declines on the American stock exchange
Bonds in the USA limited the scale of strengthening after a slight beating of the consensus by the ISM services activity index in the USA in July, which increased to 51.4 points from 48.8 points in the previous month. A value of 51.0 points was expected.
The yield on 10-year Treasuries strengthened by about 5 basis points to 3.74%. The yield on two-year Treasuries fell by 6 basis points to 3.81%.
"This is the loudest cry from the market for action by the Federal Reserve since 2008," writes Daniel Kostecki, an expert at CMS Markets Poland, in a post on the X service.
Before the market opened in the USA, there was a temporary inversion of the Treasury yield curve for the first time since July 2022, which the market interprets as one of the recession signals. The yield on two-year Treasuries temporarily fell even by 21 basis points to 3.66%, and that of 10-year Treasuries by 12 basis points to 3.67%.
The sentiment is still set by Friday's job market report from the USA, which sparked concerns about the possibility of a recession in the local economy following an unexpected rise in the unemployment rate in July (4.3%, the highest in 2.5 years), resulting in a sharp increase in expectations for the pace and scale of interest rate cuts by the Federal Reserve.
In the morning, the market temporarily priced an emergency rate cut in the USA within a week by 25 basis points, even at 60% probability.
Quotes of contracts on the Fed rate indicate a rate cut of at least 50 basis points in September and November and more than 25 basis points in December.
