Concerns about economic recession dominate the global market, but the rebound of the U.S. ISM service index in July has slowed the decline in U.S. Treasury yields. The Dow Jones Industrial Average initially fell nearly 1,240 points or 3.1%, and by the end of the day, the drop widened to over a thousand points again. The S&P 500 index fell as much as 4.2%, and the Nasdaq fell as much as 6.4%, with the three-day decline of the main indices setting the deepest since June 2022. The Russell small-cap index fell as much as 5.5%, and the chip index fell about 7% before turning positive at one point. Apple fell 4.8%, Tesla fell 4.2%, and the total market value of the “tech seven sisters” evaporated by 1.3 trillion U.S. dollars at the beginning of the market. The “fear index” VIX once surged by 181% to 65.73, setting a record high since the outbreak of the epidemic in March 2020. The Chinese concept index fell 3.2% and then closed up, with New Oriental rising nearly 9%, and the offshore yuan rising 779 points to the highest in over a year. The U.S. dollar hit a seven-month low during the day, and U.S. oil fell below 73 U.S. dollars to a six-month low. The yen once rose 3.3% and broke through 142, and gold, silver, and copper all fell. Bitcoin once fell below 50,000 U.S. dollars. The 2/10-year U.S. Treasury yield curve briefly ended the inversion, and the base bond yield fell by double digits to a position not seen in over a year.
Due to investors’ deepening concerns about the slowdown of the U.S. economy and the overheating of the tech stock rally, the sentiment of risk aversion is high, and the U.S. stock market continues the decline from Asia and Europe. In just three trading days in August, the three major U.S. stock indices have all recorded the largest three-day percentage drop since June 2022, with the Nasdaq and S&P 500 indices closing at their lowest levels since early May.
The deep decline in the U.S. stock market will affect many areas such as employment, housing, healthcare, and security. Whether the U.S. stock market can recover to its former state is uncertain, but judging by the current trend, there is a certain level of difficulty.