U.S. stocks fell sharply Monday, recording their biggest one-day declines in nearly two years, as investor fears about the health of the U.S. economy sparked broad-based selling.
The Nasdaq Composite shed 3.4%, while the S&P 500 and Dow Jones Industrial Average ended 3% and 2.6% lower, respectively. Monday's selloff represented the biggest single-session point declines for each of the major indexes since Sept. 13, 2022.
The downturn for U.S. equities Monday followed a 12% decline for Japan's Nikkei index overnight and extends a multi-week slide for U.S. stocks that accelerated on Friday with the release of a July jobs report that came in far worse than expected. Weak data recently has sparked growing concerns that the U.S. economy is weaker than previously thought, raising expectations that the Federal Reserve will have to cut interest rates aggressively in the coming months.
Illustrating how widespread the selling was on Monday, every sector of the S&P 500 declined at least 1.7%, with information technology leading the way with a 3.8% drop, while every Dow component finished in the red, pushing the index to a 1000-point loss.
Shares of AI investor darling Nvidia (NVDA) closed 6.4% lower after falling more than 15% early in the session, while other large-cap chip stocks, including Intel (INTC), Arm Holdings (ARM), Micron (MU) and Super Micro Computer (SMCI), also lost ground.
Apple (AAPL) fell 4.8% following news over the weekend that Warren Buffett's Berkshire Hathaway had further reduced its stake in the iPhone maker in the second quarter. Among other mega-cap stocks, Alphabet (GOOGL), Tesla (TSLA) and Amazon (AMZN) each fell more than 4%.
Stocks of large banks, including Bank of America (BAC), JPMorgan Chase (JPM) and Citigroup (C), were also lower amid the concerns about the economy and how a downturn would affect consumer finances.
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The VIX, a measure of expected market volatility sometimes referred to as the "fear index,"jumped more than 40 points to 65 in early trading Monday, hitting levels not seen since March 2020, at the onset of the Covid-19 pandemic. The index had recovered to 38 late in the day.
The yield on the 10-year Treasury was at 3.78% after falling to below 3.70% earlier in the day, to its lowest level in more than a year, as expectations grow that the Fed will cut rates swiftly and deeply.
Traders are now pricing in an 82% likelihood that the Fed will cut its benchmark rate by half a percentage point at its September policy meeting, according to the CME Group's FedWatch tool, which forecasts interest rate movements based on fed funds futures trading data. That's up from 11% a week ago.
Amid the risk-off moves on Monday, the price of bitcoin dipped below $50,000 for the first time since February, though was trading around $54,000 recently. Gold prices fell less than 1% to around $2,450, after hitting record highs last week.
S&P Biggest Movers on Monday
August 05, 2024 06:12 PM EDT
Decliners
- Shares of casino operator Caesars Entertainment (CZR) dropped 6.9%, suffering the heaviest losses of any S&P 500 stock. Although the company reported strength in its Las Vegas segment when it reported results last week, its regional operations face tough competition, and its revenue for the second quarter fell short of expectations. Caesars also announced late last week that it would sell the World Series of Poker brand to Canada-based online gaming group NSUS.
- Walgreens Boots Alliance (WBA) shares fell 6.6%. While pressure on the pharmacy giant may be related to the uncertain economic outlook, the company also announced late last week that it would sell $1.1 billion of its stake in drug distributor Cencora. Walgreens said it will use the proceeds from the sale to fund its operations and pay down debt. The firm has struggled with slumping consumer demand and high operating costs, discussing plans to shutter underperforming stores when it reported quarterly results in June.
- Shares of Etsy (ETSY) declined 6.6% after analysts at B. Riley cut their current-quarter earnings forecast for the online crafts marketplace. Although Etsy topped sales expectations when it reported second-quarter results last week, profits fell short of estimates, and the firm's below-consensus guidance for itsearnings before interest, taxes, depreciation, and amortization (EBITDA)margin raised questions about its growth trajectory.
- Intel (INTC) shares lost 6.4% on Monday, extending losses late last week after the semiconductor giant postedweaker-than-expected quarterly resultsand announced layoffs as it aims to cut costs. In notes to investors following the earnings release, analystsquestionedwhether the cost-reduction plans will be enough for Intel to regain its competitive mojo.
Advancers
- Shares of Kellanova (K), maker of Eggo Waffles, Cheez-It, and other packaged food brands, soared 16.2%, notching Monday's top performance in the S&P 500. The leap higher for the stock followed reports thatcandymaker Mars is in advanced talksto purchase Kellanova. According toThe Wall Street Journal, a possible deal would value the snack-focused firm, which completed its spinoff from cereal giant WK Kellogg (KLG) last year, at around $30 billion.
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- Tyson Foods (TSN) shares added 2.1% after the meat producer reportedbetter-than-expected sales and adjusted profitsfor its fiscal third quarter. Although plant closures and legal costs pressured the results, the company touted its strong free cash flow generation and gains in adjusted operating income. Tyson also saw a boost from increased sales in beef, pork, and prepared foods, although chicken sales ticked downward.
- Shares of CrowdStrike Holdings (CRWD) gained 1.9% as the cybersecurity firmrebuffed claims from Delta Air Lines(DAL) that CrowdStrike should be held liable for flight disruptions following last month's global tech outage. Delta said last week that it planned to seek financial compensation from CrowdStrike to recover losses suffered as a result of the incident.
-Michael Bromberg
Mag 7 Has Lost Nearly $3 Trillion in Weeks-Long Slide
August 05, 2024 05:57 PM EDT
The U.S. tech sector took amassive hitMonday, with the so-calledMagnificent Sevenstocks all falling sharply.
The S&P 500 recorded its worst day since September 2022 on Monday, falling 3%. Monday's selloff is the latest in a string of bad days for markets. Stocks have tumbled several times in recent weeks amid concerns about aweakening U.S. economyand overbought tech stocks.
Combined, the Mag Seven have shed nearly $3 trillion in market capitalization since early July when most of the group traded at record highs. (Read the full story here.)
Despite the recent declines, six of the seven mega-cap stocks remain in positive territory for the year, with Tesla the only one in the red for 2024. Nvidia's price is more than twice as high as it's closing 2023 level.
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-Andrew Kessel
Why the Yield Curve (Briefly) Uninverted Today
August 05, 2024 03:29 PM EDT
The Treasury yield curve, one of the market's most reliable recession indicators, briefly uninverted for the first time in more than two years on Monday morning as equities sold off amid concerns about a slowing U.S. economy.
The spread between 2-year and 10-year yields, a common proxy for the Treasury yield curve, briefly dipped to -0.01 points in early trading Monday, marking the first time that the 10-year yield has exceeded the 2-year since July 2022.
The yield on 10-year Treasury notes is normally greater than on 2-year notes because longer-duration debt comes with more risk. For investors purchasing Treasury debt, those risks are primarily related to short-term interest rates.
The present yield curve, which has lasted more than two years, is the longest on record.
Yields tumbled in recent weeks as soft economic data has raised confidence the Federal Reserve will cut interest rates soon.
Read the full article here.
-Colin Laidley
Bitcoin and Other Crypto Assets Hit Hard
August 05, 2024 03:08 PM EDT
Bitcoin (BTCUSD) briefly fell below $50,000 Monday for the first time since February as U.S. economic fears spread themarket routbeyond stocks, leading to about $1.2 billion in crypto liquidations over the past 24 hours.
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It's been a roller-coaster ride for bitcoin investors. This morning's low was nearly 30% below the$70,000 price levelbitcoin hit exactly a week ago. The largest cryptocurrency by market cap recovered somewhat, trading above $53,000 in afternoon trading.
As the stock market began to crumble Friday, nervous investors pulled out $237.4 million from spot bitcoinexchange-traded funds (ETFs), according to data from Farside Investors.
Other crypto assets have also been hit hard. Ether (ETHUSD) and Solana (SOLUSD) both lost about a quarter of their value over the past week.
Crypto-related stocks felt the double whammy of selling pressure from both the stock and the crypto markets. Shares of MicroStrategy (MSTR), one of the largest corporate holders of bitcoin, were down 11% while those of Block (SQ) and Coinbase (COIN) were also down sharply.
Bitcoin miner stocks traded lower, too. Cleanspark (CLSK), Hut 8 (HUT), Marathon Digital (MARA) and Riot Platforms (RIOT) all tumbled.
-Kyle Torpey
Kellanova Jumps on Reports of Possible Sale to Mars
August 05, 2024 02:05 PM EDT
Kellanova (K) shares soared Monday, bucking the broader market selloff, on reports that candy giant Mars is in advanced talks to buy the maker of Pop-Tarts and Pringles.
According toThe Wall Street Journal, a deal could be imminent and would value Kellanova at around $30 billion in one of this year’s biggest M&A transactions. Reuterswas the first to report on the potential deal.
Kellanova wasspun outof Kellogg last year and is focused on snacks and other foods, while WK Kellogg (KLG) houses the traditional Kellogg cereal brands, such as Corn Flakes and Fruit Loops.
If the deal is struck, it would mark one of the largest M&A deals of the year and biggest in the packaged foods sector ever. Last September, J.M. Smucker (SJM)agreed to buyHostess Brands (TWNK), the maker of Twinkies, for $5.6 billion, including $900 million in debt.
Last week, Kellanova reportedbetter-than-expected second-quarter resultsand raised its guidance, boosted by North and Latin American demand.
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Kellanova shares were up 15% to a 52-week high in afternoon trading, leading S&P 500 advancers.
-Nisha Gopalan
Apple Falls as Buffett Trimmed Stake Again in Q2
August 05, 2024 01:08 PM EDT
Shares of Apple (AAPL) took a hit afterWarren Buffett'sBerkshire Hathaway (BRK.A,BRK.B)revealed over the weekend that it reduced its stake in the iPhone maker by nearly 50%.
The conglomerate's most recentSecurities and Exchange Commission (SEC)filing showed anApple stake worth $84.2 billionas of June 30—49% lower than its stake a quarter earlier.
The move comes after Berkshire slashed its Apple holdings by13% in the first quarter.
Despite the cuts, Apple remains Berkshire's largest holding, ahead of Bank of America (BAC), American Express (AXP), The Coca-Cola Company (KO), and Chevron (CVX).
Apple shares were down more than 4% in afternoon trading Monday.
-Andrew Kessel
Nvidia Slides as New AI Chip Reportedly Delayed
August 05, 2024 11:38 AM EDT
Nvidia (NVDA) shares fell sharply early trading Monday following reports that the company's highly anticipated Blackwell system, including its next-generationartificial intelligence (AI)chips, will be delayed. Nvidia was leading a broader tech sector decline as global stock markets retreated amid growing concerns about the health of the U.S. economy.
The Blackwell AI chip could be held up by three months or more because of design flaws,The Informationreported, citing anonymous sources close to the company.
Nvidia told Microsoft (MSFT) and another large cloud provider there was a delay, the article said. A delay would affect Amazon (AMZN), Alphabet's (GOOGL) Google, Meta (META), Microsoft,ChatGPTmaker OpenAI,Tesla(TSLA), andElon Musk's xAI, among others.
Strong demand for Blackwell ahead of its rollout played a key role in helpingdrive Nvidia's stock higherthis year, and was expected tolift Nvidia partnerslike Micron Technology (MU) and Monolithic Power Systems (MPWR), as well as benefit others in the AI space.
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Nvidia shares were down 5.8% at $101.07 in recent trading, after sliding as low as $90.69 earlier in Monday's session.
-Naomi Buchanan
Bank Stocks Slide on Economic Concerns
August 05, 2024 11:02 AM EDT
Bank stocks tumbled on Monday as last week’s sell-off, which was accelerated by a weak jobs report on Friday, extended into the new week amid concerns about the rising risk of a U.S. recession and a weakening consumer outlook.
The S&P Banks Select Industry Index was down nearly 4% in recent trading. Shares of America’s largest lenders, JPMorgan Chase (JPM) and Bank of America (BAC), were down 2.5% and 3.5%, respectively.Citigroup shares fell more than 5%.
"Given the credit sensitivity of these banks, and signs from the credit card companies that the consumer is slowing down, I think that this is just an indiscriminate selloff for portfolio managers of anything that is sensitive to higher credit losses and a weakening economy," UBS large-cap banks analyst Erika Najarian said on CNBC Monday morning.
VIX Jumps to Highest Level Since March 2020
August 05, 2024 09:36 AM EDT
One measure of stock market volatility surged to its highest level since the early days of the Covid-19 pandemic on Monday morning as stocks across the globe continued to suffer big losses.
The Cboe Volatility Index (VIX) jumped above 60 on Monday, the highest the "fear index" has been since March 2020. It is the index's highest reading outside of two distinct market meltdowns: the onset of Covid-19 and the fallout from the failure of Lehman Brothers in September 2008.
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-Colin Laidley
Investors Flee Risk for Safety of Bonds
August 05, 2024 08:50 AM EDT
Money is piling into bonds as investors seek the safety of Treasurys, with the U.S. 10-year yield falling below 3.7% Monday morning for the first time since June of last year.
UBS in a note Monday said it now anticipates 100basis pointsof rate cuts this year, up from 50 basis points previously, while traders are increasingly forecasting an emergency rate cut even before the September meeting.
“US equities and bond yields fell in tandem on Friday due to weak US jobs data, raising concerns that the Fed may have delayed rate cuts too long, risking a recession," Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note Monday.
-Nisha Gopalan
Major Stock Indexes Poised to Open Sharply Lower
August 05, 2024 08:04 AM EDT
Futures tied to the Dow Jones Industrial Average were down 2.1%.
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S&P 500 futures were down 3.1%.
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Nasdaq 100 futures were down 4.6%.
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