Wall Street had its worst day in nearly two years, continuing a global rout in financial markets, as fear of a recession in America sparked a global stock market sell-off.
The S&P 500 fell 3 per cent Monday while the Dow Jones Industrial Average dropped more than 1,000 points and the Nasdaq composite slid 3.4 per cent.
It followed a 12.4 per cent plunge for Japan’s Nikkei 225, its worst day since 1987.
Shares on the London Stock Exchange also suffered the worst drop in more than a year. Elsewhere in Europe, Germany’s Dax dropped 3 per cent.
Worries over the US economy are largely to blame for the worldwide sell-off following a series of disappointing financial reports, including weaker-than-expected jobs figures on Friday.
Some of Wall Street’s recent declines may simply be air coming out of a stock market that recorded dozens of all-time highs this year, in part because of the excitement around artificial intelligence (AI) technology.
Big Tech stocks, including those wrapped up in AI, bore the brunt of the selling on Monday with shares in Nvidia, which makes chips for AI computing, falling as much as 15 per cent in early trading.
The technology-focused Nasdaq was also dented by Apple after it emerged Warren Buffett’s Berkshire Hathaway had scaled back its large stake in the tech giant.
Analysts had additional fears about the US Federal Reserve not cutting interest rates last week when policymakers left the Fed’s benchmark overnight interest rate unchanged in the 5.25 per cent – 5.50 per cent range last week.
“This is a market tantrum,” Priya Misra, a portfolio manager at JPMorgan told the Financial Times. “I think the market will continue to panic until the Fed shows signs of [cutting rates].”
Conditions by the end of Monday were still better than some had feared, though, after the Vix index of expected US stock market turbulence finished off at around 38 by Monday evening – far below the four-year high of 65 earlier in the day.