US Stock Market Plunges as Recession Fears and Tech Selloff Intensify

US stock market plummets amid recession fears, rising unemployment, and falling tech stocks, with S&P 500 nearing its 2022 low and bond yields dropping sharply.

The US stock market experienced a significant downturn on Friday, driven by growing concerns over a potential recession, rising unemployment, and disappointing performances from major tech companies. The S&P 500 fell 2.5%, approaching its lowest point since 2022, while the Dow Jones Industrial Average dropped 2.4% (954 points) and the Nasdaq composite plummeted 2.9%.

Investors' worries were fueled by a substantial hiring slowdown in July, with only 114,000 jobs added compared to last year's monthly average of 215,000. The unemployment rate rose to 4.3%, its highest since October 2021, missing economists' forecasts and contributing to negative market sentiment.

Tech giants' underwhelming profit reports further exacerbated the selloff. Amazon shares fell 9.9% due to weaker-than-expected quarterly revenue, while Intel plummeted 26.5% following a profit decline. Even Apple, despite a 2% gain, showed slowing momentum.

The bond market also felt the impact, with Treasury yields falling sharply from 3.98% to 3.81%, reflecting investors' flight to safer assets.

Market analysts draw parallels between the current situation and the dot-com bubble of the late 1990s, noting the recent rally in AI-led company shares. The upcoming US presidential election in November adds another layer of uncertainty, prompting caution among investors.

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Fears are mounting that the Federal Reserve's indicated rate cut in September may not be sufficient to counteract the prolonged effects of higher interest rates. This concern, coupled with the broader economic indicators, has led to a widespread market retreat.

As the US grapples with these economic challenges, the global financial community watches closely, aware that ripple effects could impact markets worldwide. Investors and policymakers alike are now focused on upcoming economic data and Federal Reserve decisions for clues about the future direction of the US economy and financial markets.