https://edition.cnn.com/business/live-news/global-stock-markets-plunge/index.htm...5 min ago
Why is the stock market freaking out today?
The Dow was set to open 1,300 points lower, and the broader market is on pace to plunge 4.5% Monday. The Nasdaq, full of risky tech stocks, was on pace to drop an alarming 6%.
And all of that comes amid a global market meltdown. Japan’s Nikkei 225 index nosedived 12% — its worst rout in history.
A number of factors are sending markets into a tailspin, but the most prominent is fear that the US economy is in much worse shape than previously believed — evidenced by Friday’s unexpected jump in the unemployment rate.
The stock market had hit record after record this year, buoyed by falling inflation and the growing sense that the Fed would shift to rate cuts, which can boost corporate profits. Stocks had also been flying high because of big bets on tech companies involved in artificial intelligence: Many hoped that AI would create another global industrial revolution.
But the Fed didn’t cut rates as many had hoped last week. Friday’s jobs report was significantly weaker than expected. And AI profits are basically nonexistent, and the unproven technology isn’t yet ready for prime time — and some fear it’ll never get there.
So, investors are running for the hills. They’re selling off oil, crypto and especially tech stocks. Instead, they’re pouring into safe havens like bonds, sending Treasury yields lower.
The only question now: How long will this fear last before investors sense a buying opportunity?
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