Wall Street faced a rough day on Friday as fears of a recession wiped out $2.9 trillion from the stock market’s capital, US media reports indicate.
Even tech giants like Microsoft and Nvidia could not escape the trend; the two companies’ market values shrunk by 2% and 5%, respectively.
The meltdown on Wall Street created a butterfly effect, causing stock markets around the world, including those in Europe and Asia, to face a significant downturn on Friday amid growing fears of an impending recession in the United States.
This sell-off was primarily driven by a combination of weak economic data and disappointing earnings from key technology companies, shaking investor confidence and leading to a flight towards safer assets like gold.
The mounting concern about the US economy sliding into a recession triggered a widespread sell-off that accelerated after Friday’s employment report. Official data indicates that the US job market is continuing to bleed jobs, causing unemployment to spike.
The US economy added just 114,000 jobs in July, a substantial drop from June and well below the 175,000 jobs that analysts had forecasted.
The unemployment rate rose from 4.1% to 4.3%. According to a report from The Guardian, economists are concerned that the US economy might be in a more fragile state than the Federal Reserve, the US central bank, had initially anticipated.
According to experts, the data could compel the Federal Reserve to consider a significant reduction in interest rates in September, or even potentially an emergency rate cut beforehand, to stimulate economic demand.