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    Home»Stock Market»Stock market rout extends to third day as Dow falls more than 1,000 points
    Stock Market

    Stock market rout extends to third day as Dow falls more than 1,000 points

    August 7, 20244 Mins Read


    Investors’ concerns over a U.S. economic slowdown led stocks to plummet Monday, with the S&P 500 dropping by its largest margin in nearly two years and the Dow Jones Industrial Average falling more than 1,000 points.

    The S&P 500 fell 3%, and the Dow dropped 1,033 points, or 2.6%. The Nasdaq composite slid 3.4% as Apple, Nvidia and other Big Tech companies that used to be the stars of the stock market continued to wilt. 

    The drops were the latest in a global sell-off that began last week. Japan’s Nikkei 225 helped start Monday’s sell-off by plunging 12.4% for its worst day since the Black Monday crash of 1987.

    It was the first chance for traders in Tokyo to react to Friday’s report showing U.S. employers slowed their hiring last month by much more than economists expected. 

    WHAT TO KNOW

    • Stock prices fell Monday, with the S&P 500 dropping 3% in its worst performance in nearly two years. The Dow dropped 1,033 points, or 2.6%, and the Nasdaq composite, which is dominated by tech stocks, plunged 3.4%.
    • The drops were the latest in a global sell-off that began last week. Japan’s Nikkei 225 helped start Monday’s sell-off by plunging 12.4% for its worst day since the Black Monday crash of 1987.
    • The news has led to fears the Federal Reserve erred when it chose to keep its benchmark interest rate at a 23-year high last week rather than lowering the rate and making it cheaper to borrow money.

    That has led to fears the Federal Reserve erred when it chose to keep its benchmark interest rate at a 23-year high last week rather than lowering the rate and making it cheaper to borrow money. 

    Over the weekend, economists at Goldman Sachs released a report putting the probability the United States enters a recession within the next 12 months at 25%, up from 15%, describing recession risk as “limited.” 

    Local financial experts said the worst for stocks could be over soon. Economist John A. Rizzo predicted on Monday that a calm would descend on Wall Street later this week because little economic news is expected in the next 14 days.

    “This is a sell-off that has nothing to do with any fundamental weakness in the U.S. economy … This all suggests the sell-off should not be persistent and financial markets should recover sooner rather than later,” said Rizzo, a Stony Brook University professor.

    That better news could come from the next report on U.S. employment, or an interest rate cut at the Fed’s Sept. 18 meeting. Rizzo said he didn’t think the Fed would act sooner.

    “I don’t think the Fed will cut before their next meeting, in part because it may stoke fears that the economy is even worse, but also because the Fed does not like to admit its own mistakes,” he said.

    Since the end of last year, the S&P 500 is up 8.7%, the Dow is up 2.7% and the Nasdaq is up 7.9%.

    Stocks had been performing exceedingly well before this past week, and it’s normal to see sharp moves lower during a bull market, said Michael Desepoli, vice president at Heritage Financial Advisory, a Smithtown-based financial planning and wealth management firm. 

    He said investors could take this time to better understand what’s in their portfolios but should be careful before acting on nerves. 

    “I remind people that doing nothing is a choice,” Desepoli said. “ … People feel uncomfortable. They feel that anxiety, so they feel they must do something to make themselves feel better, and a lot of times, if that something was selling stocks, they ended up taking an action that harmed them in the long run to make themselves feel a little better in the short run.” 

    On the Long Beach boardwalk on Monday, patrons of the eatery Beach Burger had mixed reactions to the plunge in share prices.

    Ricardo Sanchez, 56, who owns a landscaping company in Freeport, said he was trying to remain calm.

    “I don’t like what I’m seeing, but I also know that it’s not good to act on my emotions,” the Baldwin resident said. “I’m going to wait and see. I won’t do anything for at least another couple of days.”

    Maryann Pinto, 35, a homemaker from Long Beach, said she made an appointment last week to see her financial planner this week.

    “I need to find out what I should do,” she said. “It’s scary to think about how much money I’ve lost already.”

    With AP

    By Jonathan LaMantia and James T. Madore



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