- Almost $2 trillion has been wiped out of the S&P 500 as the market opened Monday, driven by US recession fears
- US stock futures figures fell sharply, leading the Federal Reserve to consider cutting interest rates before the predicted September meeting
- The cryptocurrency market also faced a bearish condition, with more than $340 billion in outflows from crypto products on the same day
The US stock market opened sharply lower on Monday, wiping out nearly $2 trillion from the S&P 500 index, as investors dumped equities on growing fears of a recession.
Massive Losses in Stock Futures
As soon as trading began, US stock index futures suffered staggering declines. S&P 500 futures sank over 4%, Dow futures plummeted over 3%, and the tech-heavy Nasdaq 100 futures plunged more than 5%.
The losses in futures point to a grim opening for the major stock indices, with the S&P 500 on track to shed nearly $2 trillion in market value.
Bearish Signals Flash as Investors Flee Risk
The market turmoil comes amid increasing signs that the US economy is slowing down rapidly. Recent data has shown contracting manufacturing activity, declining consumer confidence, and other recessionary red flags.
An ominous signal came from the HSBC equity cycle model, which is now at its most bearish level since October 2022. While sell-offs don’t usually persist for long, the firmly negative outlook reflects investors’ skittish sentiment.
Calls for Emergency Fed Rate Cut to Steady Markets
With recession alarm bells ringing loudly, there are growing calls for the Federal Reserve to take emergency action to stabilize markets.
Jeremy Siegel, a professor at the Wharton School, urged the Fed to implement a swift 0.75 percentage point rate cut to reassure investors. However, the central bank isn’t scheduled to meet until September, meaning any rate relief would likely have to wait.
Global Markets Plunge in Tandem
It’s not just US markets suffering. Stocks around the world are deep in the red as well. Japan’s Nikkei index saw its worst drop since 1987, while Taiwan’s market had its steepest losses since 1967.
Cryptocurrencies have also been hammered, with over $340 billion flowing out of digital asset products amid the risk-off environment.
The widespread market turmoil highlights how interconnected global finance has become. As the world’s largest economy, distress in the US quickly ripples across borders. With recession fears looming, there seems to be nowhere to hide for investors seeking shelter.
Conclusion
In short, it was an ugly start to the trading week, with the S&P 500 shedding nearly $2 trillion right out of the gate. Persistent concerns about economic deterioration look poised to keep markets on edge until concrete signs of stabilization emerge. For now, uncertainty and volatility remain the name of the game.
