New Delhi [India], August 5 : The US stock market experienced a significant plunge, with Dow Jones opening more than 1000 points lower.
The downturn follows a global market sell-off, shaking investor confidence and raising concerns about an impending recession.
During the early hours of trading, the Dow Jones Industrial Average (DJIA) plummeted by 1,083.07 points, a decline of 2.79 per cent, settling at 38,654.19.
The tech-heavy Nasdaq Composite Index saw an even steeper drop, losing 680.15 points, or 4.05 per cent, to reach 16,196.01. Meanwhile, the S&P 500 fell by 164.67 points, a decrease of 3.11 per cent, landing at 5,181.89.
Ajay Bagga, banking and market expert, commented on the situation, stating, "Globally, markets are reacting after the Sahm Rule got triggered on Friday, as US unemployment reached 4.3 per cent. This is predicting a US recession."
The "Sahm Rule," a recession indicator developed by macroeconomist Claudia Sahm, who has served at both the Federal Reserve and the White House Council of Economic Advisers, is designed to signal the onset of a recession when the unemployment rate rises by a significant margin compared to its lowest point over the previous year.
The recent rise in US unemployment to 4.3 per cent has activated this rule, suggesting that the economy may be heading towards a downturn.
The sharp decline in US markets is part of a broader global market rout, driven by a combination of factors including rising inflation, geopolitical tensions, and concerns over tightening monetary policies by central banks worldwide.
Investors are grappling with the potential impacts of these issues on economic growth and corporate profitability.
As the trading day progresses, market participants will be closely monitoring economic data, corporate earnings reports, and statements from policymakers for further indications of the market's direction. The heightened volatility underscores the uncertainty and challenges facing the global economy in the months ahead.
On Friday, US markets experienced significant drops, with the Nasdaq falling by 2.43 per cent to 16,776.16, approaching a 10 per cent decline from its peak. The S&P 500 and Dow Jones also saw decreases of 1.84 per cent and 1.51 per cent, respectively.
Additionally, WTI crude oil prices hit an eight-week low due to fears of a global economic slowdown, despite persistent geopolitical tensions in the Middle East.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor