The index Dow Jones of Industriales fell by 2.6% at 38,703.27 points; S&P500 lost a 3% to 5,186.33 points and the Nasdaq Composite depreciated by 3.4% up to 16,200.08 points.
Fears of a slowdown in activity hit the US stock market and global markets in general, but economic data show underlying strength. These sharp losses follow last week’s sell-off, which was caused by the same thing.
Too much time of high rates?
A number of readings suggested the Federal Reserve had kept interest rates high for too long and that chances of a soft landing for the economy were fading.
The notion came to a head on Friday after July nonfarm payrolls data missed expectations by a wide margin, signaling a substantial cooling in the labor market.
Although the data raised hopes that the Fed would cut interest rates further, They ended investors’ desire for risky assets.
Goldman Sachs He stated in a note: “We now expect faster cuts “Because the rate on interest rates seems clearly inadequate; the Fed is looking back, having worried too much about inflation for too long and holding steady in July; and the justification for cutting now includes the more urgent priority of supporting the economy.”
Even so, Monday’s economic data suggests a recession is not on the immediate horizonsince the indicator prepared from the information provided by purchasing managers of companies belonging to the manufacturing sector (PMI), met economists’ estimates for July and prices paid, an indicator of inflation, also surprised to the upside.
The Voice of the Fed
Federal Reserve speakers will be closely watched this week as investors have priced in aggressive rate cuts in the future. Chicago Fed President Austan Goolsbee said Monday that “the Fed is looking to cut interest rates.” The central bank is prepared to respond to signs of economic weaknesssuggesting that current interest rates may be too prohibitive,” adding that “it makes no sense to maintain a restrictive policy stance if the economy is weakening.”
Markets now factor in a 78% chance that the Fed will not only cut rates in September, but ease them by 50 basis points.
Actions: a sea of red
The Apple shares fell more than 5% after Warren Buffett’s Berkshire Hathaway shed nearly half its stake in the iPhone maker as part of a broader stock sell-off (which was launched months ago).
Nvidia lost 6% after reports of a delay in the launch of its upcoming home-made artificial intelligence chips due to design flaws.
Lucid Group Inc fell 4% just before presenting its second-quarter results, which will be published after the close on Monday.
The BioNTech shares fell more than 4% after the drugmaker’s second-quarter earnings missed estimates amid a continued decline in sales of its Covid-19 vaccine.
High-profile results continue.
Most large-cap companies have already reported their results, but some high-profile quarterly earnings are still expected in the coming days.
The industrial leader Caterpillar and the major ride-sharing company Uber Technologies is scheduled to report its results on Tuesday.
Super Micro Computerwhich saw its valuation surge amid the hype about artificial intelligence, is also scheduled to report results on Tuesday, while major media companies Walt Disney and Warner Bros Discovery is scheduled to present its results on Wednesday.
Elon Musk sues again.
Businessman Elon Musk has again filed a lawsuit against OpenAI, the parent company of ChatGPT and its two founders, Sam Altman and Greg Brockman, for alleged fraud and breach of contract “by not developing artificial intelligence “for the good of humanity”its original mission.
The lawsuit, which was made public on Monday but was filed in California last Thursday, is similar to the one Musk withdrew on June 11 just hours before a San Francisco court was due to decide whether to accept the claim.
In the new lawsuit, Musk cites that Altman, Brockman and OpenAI defrauded him, since the $45 million that the entrepreneur invested was to create a company whose mission was the development of non-profit artificial intelligence.
Source: Ambito
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