In a single day, the U.S. stock market lost $1.05 trillion. The drop represents one of the largest one-day declines in recent times, and reflects a combination of disappointing economic data and massive corporate conflicts.
It is understandable that investors are concerned because this decline raises some disturbing questions about the stability of this market.
Stock Market: Economic Data Drives Decline
The Dow Jones Industrial Average fell more than 626 points in the first seconds of trading after the opening bell. By the close, it had fallen more than 700 points and finished down more than 2% at around 40,936.93.
The sell-off was prompted by weak manufacturing data, the fifth straight month of contraction. The news sent investors into a panic, eventually leading to a massive sell-off across the board.
The S&P 500 lost about 2.4% to close at about 5,530 points. Technology stocks were the hardest hit, especially Nvidia, which fell 9.5%. That was the biggest one-day drop in the shares of any U.S. company, wiping $279 billion off its market value.
Crude oil prices fell to $72.66 a barrel, reflecting further concerns about global demand and adding to the market’s woes.
The US stock market lost $1.05 trillion today, and cryptocurrencies remained relatively stable. pic.twitter.com/mO6xdCGkni
— Marty Party (@martypartymusic) September 3, 2024
Nasdaq most affected
The Nasdaq Composite was the weakest of the major indexes, falling about 3.5% to 17,136.30. It was its worst day since early August. Because the Nasdaq is heavily weighted by technology stocks — especially after the collapse of Nvidia — it suffered heavy losses.
As tech stocks continue to slide, investors can only guess how long the decline might last and what it might mean for the broader market.
Image: Daily Sabah
Impact on cryptocurrencies
Oddly enough, while the stock market was in a frenzy, Cryptocurrencies Like Bitcoin and Ethereum, cryptocurrencies have held up somewhat. Bitcoin has lost 3% of its value, while Ethereum has fallen below $2,500.
History also shows that September has been the most difficult month for stocks and cryptocurrencies. It typically sees increased volatility from traders preparing for monthly economic reports and interest rate changes.
BTC market cap currently at $1.16 trillion. Chart: TradingView.com
Bitcoin market cap is stable
Despite the decline that Bitcoin is experiencing these days, its market cap is still healthy at around $1.2 trillion, with an annual return of 128%.
The short-term outlook is very bleak, but some analysts are cautiously saying that a recovery could be on the cards. They are banking their optimism on the upcoming US elections and the planned release of $14.5 billion to FTX creditors.
But everything depends on what will be announced regarding future economic data. If the economic reports continue to be weak, there may be more pain ahead.
But what really underscores the magnitude of the uncertainty is the $1.05 trillion wiped off the U.S. stock market. As investors grapple with the fallout from weak economic data and major corporate declines, all eyes are on the next set of reports and political affairs.
It is clear that some feel that they have hit bottom, but challenges lie ahead, and how long it will take for this sector to actually climb out of its hole is anyone’s guess.
Featured image by TipRanks, chart by TradingView
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