By STAN CHOE and ELAINE KURTENBACH
NEW YORK (AP) — Japan's benchmark Nikkei 225 index rose greater than 10 percent early Tuesday, a day after causing turmoil in Europe and on Wall Street. Other markets in Asia appear to have calmed down somewhat after the rollercoaster ride earlier within the week.
The frightening Monday began with a Crash abroad reminds of 1987 The crash that went all over the world and hit Wall Street with greater losses, than the fears a few Slowdown US Business.
The Nikkei rose nearly 11% early Tuesday but then fell back to shut 8.7% higher at 34,211.83 as investors snapped up bargains after the day past's 12.4% plunge.
On Monday, the S&P 500 lost 3 percent, its worst day in nearly two years. The Dow Jones Industrial Average tumbled 1,033 points, or 2.6 percent, while the Nasdaq Composite fell 3.4 percent as Apple, Nvidia and other Big Tech firms that were once the celebrities of the stock market continued to falter.
The declines were the most recent in a wave of world selling that began last week, and were the primary opportunity for traders in Tokyo to react to Friday's report that showed the U.S. Employers slowed their hiring rate last month by way more than economists expected. These were the most recent data on the US economy, which were weaker than expectedand all of it caused fear, the The US Federal Reserve has slowed the US economy for too long and an excessive amount of, through high Interest charges with hope for suffocating inflation.
Professional investors warned that some technical aspects could amplify the market movement and that declines could have been overdone, but losses were nonetheless staggering. South Korea's Kospi index plunged 8.8 percent and Bitcoin fell from over $61,000 on Friday to below $54,000.
Even gold, which has a status for providing safety in turbulent times, lost about 1 percent.
Elsewhere in Asia, Hong Kong's Hang Seng Index rose 1.1 percent to 16,876.98 early Tuesday and the Kospi jumped 3.5 percent to 2,526.20. Taiwan's Taiex rose 1.2 percent and in Australia the S&P/ASX 200 rose 0.3 percent to 7,675.90.
The Shanghai Composite Index, which was largely unaffected by the day past's drama, rose 0.2 percent to 2,865.06.
Monday's declines reflected fears that the damage to the economy from persistently high rates of interest is so great that the Federal Reserve may have to chop rates in an emergency meeting before making its next decision on Sept. 18. The yield on two-year U.S. Treasury notes, which closely tracks Fed expectations, briefly fell below 3.70 percent through the morning, after reaching 3.88 percent late Friday and 5 percent in April. It later recovered and fell back to three.89 percent.
“The Fed could come in on a white horse and save the day with a big rate cut, but the case for a rate cut between meetings seems flimsy,” said Brian Jacobsen, chief economist at Annex Wealth Management. “Those are usually reserved for emergencies like COVID, and an unemployment rate of 4.3% doesn't really seem like an emergency.”
Naturally, the US economy continues to be growingThe U.S. stock market continues to be up an honest amount for the 12 months, and a recession is much from certain. The Fed made clear the high-quality line it’s walking when it began sharp rate hikes in March 2022: An approach that was too aggressive would stall the economy, but an approach that was too soft would give inflation more respiratory room, hurting everyone.
Some of the recent declines on Wall Street may simply be air escaping from a stock market that has hit dozens of all-time highs this 12 months, partly resulting from a Hype about artificial intelligence Technology. Critics have been saying for a while that the stock market looks expensive after prices rose faster than corporate earnings.
“Markets tend to move up like they're climbing stairs and down like they're falling out of a window,” said JJ Kinahan, CEO of IG North America. He attributes much of the recent worry to waning enthusiasm around AI, increasing pressure on firms to indicate how AI can translate into profits, and “a market that got ahead of itself.”
The only solution to make stocks look cheaper is for prices to fall or for earnings to rise. Expectations for the latter remain high, with the S&P 500's earnings growth last quarter expected to be the strongest since 2021.
Professional investors also pointed to the Bank of Japan’s move last week, raise its key rate of interest from almost zeroWhile such a move helps strengthen the Japanese yen, it also causes traders to exit deals through which they borrowed money for virtually nothing in Japan and invested it elsewhere on this planet.
U.S. Treasury yields also pared losses on Monday after a report said growth within the U.S. services sector was barely stronger than expected. The growth was led by firms in the humanities, entertainment and leisure and accommodation and food services sectors, in keeping with the Institute for Supply Management.
Still, stocks of firms whose profits depend most on the strength of the economy suffered sharp losses on fears of a slowdown. Small-company stocks within the Russell 2000 Index fell 3.3 percent, erasing the recovery for this and other beaten-down areas of the market.
Making matters worse for Wall Street was the crash in stocks of major technology firms because the market's hottest commodity continued to falter for many of this 12 months. Apple, Nvidia and a handful of other stocks of major technology firms, often called ” The glory seven “ had helped the S&P 500 set one record after another this year, even as high interest rates weighed on much of the rest of the stock market.
But the dynamics of big technology companies have changed in the past month because investors have priced them too high and expectations for future growth have become too difficult to meet. A series of disappointing earnings reports, accompanied by updates from Tesla And alphabet Pessimism was further intensified and the decline accelerated.
Apple fell 4.8% on Monday after Warren Buffett’s Berkshire Hathaway announced that it reduced his ownership share from the iPhone manufacturer.
NVIDIAthe chip company that has become the poster child for Wall Street's AI boom fell even more, 6.4 percent. Analysts cut their earnings forecasts for the company over the weekend after a report from The Information said Nvidia's new AI chip was delayed. The recent sell-off has cut Nvidia's profit for the year to nearly 103 percent from 170 percent in mid-June.
Another Big Tech titan, Alphabet, fell 4.4% after a US court ruled that Google’s search engine illegally exploit his dominance to suppress competition and stifle innovation.
Overall, the S&P 500 fell 160.23 points to 5,186.33. The Dow fell 1,033.99 to 38,703.27 and the Nasdaq Composite plunged 576.08 to 16,200.08.
Concerns beyond corporate profits, interest rates and the economy are also weighing on the market. War between Israel and Hamas could worsen, which could lead to human casualties and also to sharp fluctuations in oil prices. This reinforces the broader concerns about potential Hot spots all over the world, while upcoming US elections could mess things up even more.
Wall Street is concerned about the impact November's policies could have on markets, but the sharp swings in stock prices could also have an impact on the election itself.
The threat of a recession is likely to put Vice President Kamala Harris on the defensive. But slowing growth could also further reduce inflation and force former President Donald Trump to shift his focus away from higher prices and instead outline ways to revive the economy.
“It's about jobs,” said Quincy Krosby, chief global strategist at LPL Financial. Jobs drive spending by U.S. consumers, who in turn make up the largest part of the U.S. economy.
“As election day approaches, the unemployment rate will play a very important role.”
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AP business writers Matt Ott, Christopher Rugaber and Damian J. Troise contributed.
Originally published:
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