Investing.com — The Dow Jones fell more than 1,000 points on Monday as growing concerns about an economic slowdown put pressure on high-flying technology stocks.
At 4:00 PM ET (20:00 GMT), they were down 1,033 points, or 2.6%, down 2.9% and down 3.4%.
Fears of a slowdown are plaguing Wall Street, but economic data shows underlying strength
These steep losses followed last week’s sell-off on fears of an economic slowdown.
A series of weak data raised concerns that the Federal Reserve had kept interest rates at high levels for too long and that the chances of a soft landing for the economy were diminishing.
This idea came to a head on Friday after July figures fell well short of expectations, signaling a significant slowdown in the labor market.
While the data raised hopes for more Fed rate cuts, appetite for risk-driven assets waned.
‘We now expect faster cuts as interest rates on the funds clearly appear inappropriately high; the Fed is looking backwards, having worried too much about inflation for too long and holding steady in July; and the rationale for the reduction now includes the more pressing priority of supporting inflation. economy,” Goldman Sachs said in a recent note.
Still, Monday’s economic data indicate that a recession is not immediately on the horizon, as economists had expected, and that prices paid, a gauge of inflation, surprised on the upside.
Fed speaks sharply
Federal Reserve speakers will be closely watched this week as investors price in aggressive rate cuts in the future. The president of the Chicago Federal Reserve said Monday that the central bank is prepared to respond to signs of economic weakness, suggesting current interest rates may be too unaffordable.
Asked whether a weakening labor market and manufacturing sector could spur Fed action, Goolsbee avoided taking a specific tack but said there is no point in maintaining a “restrictive” policy stance as the economy softens.
San Francisco Fed Chair Mary Daly was also scheduled to deliver remarks Monday.
Markets are now pricing in a 78% chance that the Federal Reserve will not only cut rates in September, but cut them by as much as 50 basis points.
Some on Wall Street aren’t sure. Morgan Stanley said in a recent article that “there is clear evidence of cooling, but there is still too much noise to justify a 50 basis point cut in September.”
Apple leads the way, Google in legal trouble
Shares of Apple (NASDAQ:) fell more than 4% after Warren Buffett’s Berkshire Hathaway (NYSE:) has shed nearly half its stake in the iPhone maker as part of a broader stock sell-off.
Alphabet (NASDAQ:), meanwhile, fell more than 6% after a federal judge ruled Monday that Google is a “monopolist” and has violated antitrust laws in the search and text ad markets.
Shares of Nvidia (NASDAQ:) fell 7% after reports of a delay in the launch of the chipmaker’s upcoming artificial intelligence chips due to design flaws.
Lucid Group Inc (NASDAQ:) fell 4% just ahead of second-quarter results due after the closing bell on Monday.
Shares of BioNTech (NASDAQ:) fell more than 4% after the drugmaker’s second-quarter revenues fell short of expectations amid a continued decline in sales of its COVID-19 vaccine.
The high profits continue
Most mega-cap companies have already reported, but some high-profile earnings results are still expected in the coming days.
Industrial whistleblower Caterpillar (NYSE:) and sharing major Uber Technologies (NYSE:) are scheduled for Tuesday.
Super Micro Computer (NASDAQ:), which saw a big valuation spike due to artificial intelligence hype, is also set to release on Tuesday, while media giant Walt Disney (NYSE:) and Warner Bros Discovery (NASDAQ:) will be released on Wednesday.
(Peter Nurse, Ambar Warrick contributed to this article.)
