Stock Market Plunge Erases $1.2 Trillion in Market Capitalization
The stock market’s benchmark index, the S&P 500, has wiped out $1.2 trillion of its market capitalization in just four hours after plummeting sharply.
An economics outlet known as Kobeissi Letter highlighted on the microblogging platform X (formerly Twitter) that the index eradicated the market capitalization of Walmart and JPMorgan combined within a short period.
This steep decline occurred amid mounting concerns of a looming recession following data from the Bureau of Labor Statistics. The data showed that the U.S. labor market had only added 114,000 nonfarm payroll jobs last month, falling short of the 175,000 economists had predicted.
Additionally, the unemployment rate in the U.S. increased to 4.3% from 4.1% in June, reaching its highest level since October 2021.
Tech Stocks Lose Billions Amid Market Downturn
The recent drop came shortly after the Magnificent 7, a group of seven megacap tech stocks, lost over $2.6 trillion in value over a 20-day period. This staggering loss amounts to an average of $125 billion per day during the same timeframe, tripling the value of Brazil’s stock market.
These tech giants, which have consistently outperformed the broader S&P 500 since 2022, are now grappling with doubts about their sustainable growth. Nvidia, for instance, has surged by over 2,300% in the last five years.
The uncertain market conditions have been further fueled by the warnings of leading macroeconomists like Henrik Zeberg, who foresee a potential recession on the horizon. Some experts predict that this recession could be the most severe since the Wall Street crash of 1929.
Moreover, the Hindenburg Omen, a technical indicator signaling potential market crashes, has recently triggered concerns as it reappeared just one month after its previous signal. The indicator compares the number of stocks hitting new 52-week highs and lows and raises alarms when it surpasses a specific threshold, indicating an elevated risk of a market crash.
Hot Take: Brace Yourself for Market Volatility
As market indicators continue to highlight economic uncertainties, it is crucial to stay vigilant and informed about the evolving market conditions. Keep an eye on key economic data and expert opinions to navigate the turbulent market landscape.
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