Amid growing recession concerns, US benchmark equity indexes experienced a significant downturn after midday on Monday. The Nasdaq Composite saw a sharp decline of 2.8%, settling at 16,310.2 intraday, marking its entry into correction territory as of Friday. Meanwhile, the S&P 500 decreased by 2.5% to 5,214.2, and the Dow Jones Industrial Average fell 2.3% to 38,835.1.
It is worth noting that all sectors faced a decline of more than 1.5%, with technology stocks bearing the brunt of the decline, plunging 3%. This downward trend was exacerbated by a disappointing jobs report released by the Bureau of Labor Statistics on Friday, which fell short of expectations for July, igniting fears of a potential recession among investors. D.A.
Davidson conveyed in a Monday client note that global stock markets have suffered severe losses, with Japanese shares, for example, exceeding their notable declines during the infamous 'Black Monday' of 1987. The primary trigger for such drastic sell-offs appears to be the escalating fears surrounding a recession in the United States, which has caused many investors to flee towards safer assets. Contrarily, several analysts have asserted that the apprehensions regarding a recession may be exaggerated, arguing that the latest labor market data doesn't reflect dire conditions, and that income growth continues to underpin consumer spending. From a broader financial perspective, the US two-year yield increased by 3.8 basis points, reaching 3.91% intraday, while the yield on the 10-year note remained relatively stable at 3.8%.
In terms of economic performance, two separate surveys depicted a mixed outlook for the US services sector in July. The Institute for Supply Management's report indicated more vigorous activity than anticipated, whereas data from S&P Global ($SPGI) suggested a slight slowing in growth. In recent economic updates, the ISM noted that the US manufacturing sector has become deeper entrenched in a contraction phase last month.
Simultaneously, S&P Global’s data indicated negative movement in activity. Furthermore, West Texas Intermediate crude oil prices slipped by 0.8%, standing at $72.92 a barrel intraday. Upcoming quarterly financial results from notable firms such as CSX ($CSX), Palantir Technologies ($PLTR), and Diamondback Energy ($FANG) are anticipated after the closing bell on Monday.
In addition, major corporations like Walt Disney ($DIS), Eli Lilly ($LLY), Amgen ($AMGN), Caterpillar ($CAT), Uber ($UBER), CVS Health ($CVS), Paramount Global ($PARA, $PARAA) and Hilton Worldwide ($HLT.US) are on the roster to disclose their earnings later in the week. In individual stock news, Intel ($INTC) shares plummeted by 6.3% intraday, representing the steepest slide across all three major indexes, following a staggering 26% drop on Friday.
This decline follows the company's second-quarter financial results that notably underperformed Wall Street's projections. The chipmaker has initiated a $10 billion cost-reduction plan and is set to suspend dividends starting in the fourth quarter. Nvidia ($NVDA) also ranked among the largest decliners on both the S&P 500 and Nasdaq, falling 6.1%.
There have been reports suggesting that delays in the launch of new artificial intelligence chips could potentially impact major clients including Microsoft ($MSFT), Meta Platforms ($META), and Alphabet's ($GOOGL) Google, with the information being sourced from unnamed personnel. In corporate developments, Mars Inc., the company known for producing M&M's and Snickers, is contemplating an acquisition of Kellanova ($K), leading to an influx in Kellanova shares, which surged by 14% intraday on Monday, marking it as the top gainer on the S&P 500. In contrast, Tyson Foods ($TSN) emerged as one of the best performing stocks on the S&P 500, rising by 3.2%, driven by a fiscal third-quarter performance that surpassed expectations year-over-year, supported by increases in price and volume for beef and pork products.
The company reaffirmed its sales forecasts for the full year. On the commodities front, gold prices dipped by 1% to $2,444.70 per troy ounce, while silver saw a more notable decline of 4.3%, trading at $27.19 per ounce..