Global Selloff Intensifies With Focus on Fed Rescue

What You Need to Know

Markets are extending last week’s retreat, when a weak U.S. jobs report ignited fears that the Fed isn’t moving fast enough to prevent a sharp economic downturn.
At one point, Nasdaq futures tumbled 6.5%, coming close to triggering a circuit breaker, before paring the drop.
Investors sought havens in government bonds and the Swiss franc.

Global stock markets tumbled, with losses cascading across tech shares, Nasdaq 100 Index futures falling more than 4% and Japanese equities crashing by the most in over a decade.

As concerns about a U.S. economic slowdown intensified, traders ramped up bets that the Federal Reserve will step in with an emergency interest rate cut, putting the odds at 30% for a quarter-point reduction.

The dollar weakened, and the 10-year Treasury yield fell to the lowest in a year. Wall Street’s fear gauge, the CBOE Volatility Index, soared to the highest since 2020.

Nvidia Corp., Apple Inc. and Tesla Inc. fell more than 7% in premarket trading. Berkshire Hathaway Inc. reported on Saturday that it had slashed its stake in Apple by almost 50% as part of a massive second-quarter selling spree. Chipmakers including Intel Inc. and Advanced Micro Devices Inc. also plunged.

Markets are extending last week’s retreat, when a weak U.S. jobs report ignited fears that the Fed isn’t moving fast enough to prevent a sharp economic downturn.

The wave of selling hit a fever pitch in Japan as traders rushed to unwind popular carry trades, powering a 3% surge in the yen and causing the Topix stock index to shed 12% and close the day with the biggest three-day drop in data stretching back to 1959.

“The key point is the current shift in narrative, from no landing to soft landing,” said Florian Ielpo, the head of macro research at Lombard Odier Asset Management. “That risk was poorly priced and investors shifting gears fast explains the extent of the move.”

At one point, Nasdaq futures tumbled 6.5%, coming close to triggering a circuit breaker, before paring the drop. The index has already fallen more than 10% since its July 10 record, passing the threshold that meets the definition of correction.

Investors sought havens in government bonds and the Swiss franc.