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Concerns over the slowdown in the US economy are causing major declines in stock markets

2024-08-05 20:37:00, Kosova & Bota CNA

Concerns over the slowdown in the US economy are causing major declines in stock

New York Stock Exchange, August 5, 2024. Source, AP

The U.S. stock market fell on Monday on fears that the U.S. economy is experiencing a further slowdown, triggering a broad selloff in financial markets around the world.

The S&P 500 index (which represents the 500 largest companies in the US) suffered its biggest drop in stock value since 2022, falling 2.4%. The Dow Jones (index of 30 largest companies) fell 2.2%, while the Nasdaq index of technology companies fell 2.7%.

The decline in the value of stocks in the United States was followed by a wave of selling stocks globally, which began last week. Japan's Nikkei stock market suffered its biggest decline since 1987, losing 12.4% of its value on Monday, ahead of the opening of stock markets in Europe and the United States.

It was the first opportunity for stock markets in Tokyo to react to a report on Friday that showed US employers slowed the pace of hiring last month by a much larger rate than economists had forecast. This raised fears that the Federal Reserve may have held back the US economy for too long by raising interest rates in an effort to reduce the rate of inflation.

South Korea's Kospi stock fell 8.8%, stock markets across Europe fell more than 2% and digital currency Bitcoin fell from $61,000 on Friday to less than $55,000.

Even gold, which has a reputation as a safe investment in volatile economic times, fell 1%. That decline was driven in part by fears that the economic damage is so severe that the Federal Reserve will have to cut interest rates at an emergency meeting ahead of its scheduled September 18 meeting.

The US economy is still growing and it does not face a major downturn in the short term.

The decline in the stock market was influenced by factors other than corporate earnings reports, interest rates and the economy. The Israel-Hamas war may worsen and, in addition to casualties, may also cause strong fluctuations in the price of oil. This is adding to wider concerns about other conflict zones around the world, while upcoming elections in the United States could further worsen the economic situation./ VOA