Commentary: Weak U.S. Economic Data Hits Market Ripe for Turmoil
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Global stock markets experienced major turmoil Monday.
In the U.S., the Dow Jones Industrial Average closed down 2.6%, the S&P 500 dropped 3%, and the Nasdaq Composite Index fell 3.4%. Meanwhile, the “fear index” VIX surged 181% at one point, reaching its highest level since March 2020, when the Covid-19 pandemic began.
The slump in U.S. stocks was driven by several factors. First, the country’s second-quarter GDP growth and nonfarm employment data both fell short of expectations, fueling market expectations that future corporate profitability will be affected. Additionally, multiple large tech companies, such as Apple Inc., Amazon.com Inc. and Alphabet Inc., reported lackluster and worse-than-expected profit growth, leading to a sell-off in tech stocks.
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- U.S. stock markets dropped significantly: Dow Jones down 2.6%, S&P 500 down 3%, and Nasdaq down 3.4%.
- Geopolitical risks, supply chain issues, and monetary policy divergence contributed to global market instability; Japan’s Nikkei 225 fell 12.4% and South Korea’s KOSPI fell 8.8%.
- Strengthening policy coordination, flexible monetary policies, infrastructure investment, and financial regulation are recommended to bolster market confidence and economic resilience.
- Apple Inc.
- Apple Inc. reported lackluster and worse-than-expected profit growth, contributing to the sell-off in tech stocks and the overall slump in U.S. markets. This decline in profitability heightened market expectations of future negative impacts on corporate earnings.
- Amazon.com Inc.
- Amazon.com Inc. was among several large tech companies that reported worse-than-expected profit growth, contributing to the sell-off in tech stocks and the overall turmoil in the U.S. stock market on Monday.
- Alphabet Inc.
- Alphabet Inc., the parent company of Google, reported worse-than-expected profit growth, contributing to a sell-off in tech stocks. This underperformance was one of the factors driving the significant decline in U.S. stock markets, including a 3.4% fall in the Nasdaq Composite Index.
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