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Stock futures fell sharply on Monday amid escalating fears of a U.S. recession, with Dow Jones Industrial Average futures dropping 1,300 points and Nasdaq Composite futures declining by 5%.
This turmoil was triggered by a disappointing jobs report and declining manufacturing activity, as well as weak forecasts from major tech companies that pushed the Nasdaq into correction territory.
Analysts noted that the jobs data has activated the “Sahm Rule,” historically a reliable recession indicator, as the unemployment rate has risen significantly above its previous low.
Major US stock indexes ended sharply lower as US recession worries shook global markets and drove investors out of risky assets, while Apple shares dropped as Berkshire Hathaway cut its stake in the company https://t.co/4t5giwaJDT pic.twitter.com/btW54RR3xS
— Reuters (@Reuters) August 5, 2024
“While Friday’s employment report was disappointing, it wasn’t the only worrisome economic indicator, only the latest,” Bankrate chief financial analyst Greg McBride said.
“Couple economic concerns with the cacophony of earnings disappointments and weak corporate outlooks, global unrest, and currency gyrations, and you have the recipe for sudden volatility.”
Additionally, major Wall Street firms adjusted their Federal Reserve rate expectations for 2024 toward more easing.
The negative sentiment extended globally, with Japan’s Nikkei 225 index experiencing its worst drop since 1987 and cryptocurrencies like Bitcoin and Ethereum suffering significant losses.
“The July jobs report is being viewed as a recession warning, and the markets are responding accordingly,” Comerica Bank chief economist Bill Adams said.