Dow futures and Nasdaq futures were both down more than 1,000 points before Monday’s opening bell on Monday while the S&P 500 futures gave up nearly 5% as Wall Street braced for a massive selloff triggered by the meltdown in Japan and renewed fears of a US recession.
The Tokyo-based Nikkei index suffered its worst single-day retreat since the infamous “Black Monday” crash of 1987 — closing 12.4% lower — while European stocks fell to near six-month lows.
The pan-European STOXX 600 index was down 2.6% at 487.15 points, its lowest since Feb. 13.
Some of the world’s largest tech companies saw their stocks get hammered early on Monday morning.
Nvidia, Meta and Apple all lost 6% of their market capitalization.
Apple, the iPhone maker, was still reeling from the announcement on Saturday that billionaire investor Warren Buffett cut his stake in the company by half — though the Berkshire Hathaway chief remains the firm’s largest shareholder.
Last week, Buffett also sold off $3 billion worth of stock in Bank of America.
Cryptocurrency was also hit hard by Monday’s meltdown in the markets. Bitcoin shed more than 17% of its value while ethereum was down more than 21%.
The global digital currency market lost a total of $1.79 trillion from its market capitalization over the course of the last 24 hours.
The most recent jobs report from last week, which showed hiring crawl to a slower-than-expected pace, had Wall Street fearful of the prospects of a recession.
Analysts at investment banking giant Goldman Sachs on Sunday raised the odds of a recession next year from 15% to 25%, though they cautioned that such a risk was “limited.”
The weak jobs report and the global stock selloff has also fueled analyst expectations that the Federal Reserve will step in and institute emergency interest rate cuts in hopes of re-energizing the economy.
A recession would upset the Fed’s plan to slowly introduce rate cuts as part of a “soft landing.” But the latest data has led some critics to pounce on the central bank for not acting fast enough to slash rates when signs of cooling inflation were apparent.
“The Federal Reserve has been late in cutting rates, but that has been true for some time,” Paul Donovan, a UBS economist, wrote in a client note Monday morning cited by The New York Times.
“The policy error is making things worse for lower income households.”
Prior to Monday, the markets priced in a 78% chance the Fed will not only cut rates in September, but ease by a full 50 basis points.
Futures imply 122 basis points of cuts in the 5.25-5.5% funds rate this year, and rates of around 3.0% by the end of 2025.
Despite the tanking stock markets, now is not the time to panic, according to Dan Ives, managing director and senior equity research analyst who covers the tech industry for Wedbush Securities.
Ives told CNBC on Monday that the selloff was driven by a “massive fear panic” but that investors should “view this as more of an opportunity.”
With Post Wires