Dow falls more than 1,000 points as US stocks extend slump

A television screen on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024, headlines trading. Nearly everything on Wall Street is tumbling as fear about a slowing U.S. economy worsens and sets off another sell-off for financial markets around the world. (AP Photo/Richard Drew)

New York, United States — Wall Street stocks suffered a bruising rout Monday, extending a pullback attributed to economic unease and fallout from recent lurches in overseas financial markets.

All three major indices spent the entire day in the red, with the Dow Jones Industrial Average losing 2.6 percent, or more than 1,000 points, to finish at 38,703.27.

The broad-based S&P 500 shed 3.0 percent to end at 5,186.33, while the tech-rich Nasdaq Composite Index dropped 3.4 percent to 16,200.08.

READ: Fed under pressure to cut rates as market turmoil continues

The losses followed down days last Thursday and Friday on the heels of poor US employment data and a negative survey from manufacturers that sparked worries about a recession.

Seizing on that point, some market watchers have called for the Federal Reserve to cut interest rates — perhaps even in an emergency meeting — after the central bank kept rates unchanged last week.

But market watchers are also focusing on the ripple effects of Japan’s decision last week to hike interest rates, which boosted the yen and slammed Japan’s Nikkei equity market, which dove 12.4 percent.

“It’s an abrupt move in a market that has a lot of tentacles,” Art Hogan of B. Riley Wealth said of the Japan currency shift, which is believed to have led to speedy liquidations in other markets.

Hogan believes the Japan currency movements are much more a factor in the turbulence than recession fears.

Survey results of services companies by the Institute for Supply Management showed stronger than expected growth, boosting US Treasury bond yields.

READ: Why financial markets around the globe are falling

Analysts at High Frequency Economics called the report “a refreshingly stronger-than-expected outcome” that helps to counter the gloom from last week’s economic data.

“Whether it will turn around the US equity sell-off is to be determined, of course,” it added.

Among individual companies, Google parent Alphabet dropped 4.6 percent after a US judge sided with antitrust officials who had alleged that the company operated a monopoly with its dominant search engine.

Apple also had a bad day, losing 4.8 percent on news that Warren Buffett’s Berkshire Hathaway had cut its stake in the tech giant.