NEW YORK (AP) — Markets on Wall Street and around the world are in a mini-panic. Worried about a slowing U.S. economy, investors sent the market in Japan to its worst day in decades and have sliced billions in market value off some of the world’s biggest technology companies. They’ve turned a relatively calm year in markets on its head.
For most of the year, investors worldwide drove stock markets higher, convinced that central banks were successfully, if haltingly, getting inflation under control, and buoyed by a healthy U.S. economy and the promise of artificial intelligence.
That confidence has taken a hit the past few days. Weak readings on the job market, manufacturing and construction last week sparked worries about a U.S. economic slowdown and criticism that the Federal Reserve waited too long to cut rates. Meanwhile, the Bank of Japan raised rates, causing turmoil in Japan’s markets. On Monday, the Nikkei plunged more than 12%, its worst drop since 1987.
Investors are now listening to warnings that Apple, Nvidia and other Big Tech stocks have gotten too expensive. On Friday, the tech-heavy Nasdaq composite went into a correction, which is a 10% decline from its most recent high. It dropped an additional 3,4% Monday.
Traders in the U.S. are betting the Federal Reserve will lower rates by half a percentage point in September instead of the usual quarter point. Some are calling for an emergency rate cut. The heaviest selling has been in small companies that make most if not all their sales and profits in the U.S. Prices for oil and other commodities fell because of the economic worries.
However, there are opposing voices saying the sell-off is a good thing because stock prices had risen too high. For individual investors, it’s not time for rash decisions, but a moment to make sure their investments are properly diversified, experts say.
Here’s a look at what’s driving the turbulence in markets:
Starting in 2022, the Fed rapidly raised interest rates to combat a spike in inflation. It’s maintained its key rate at 5.4% for about a year. As part of its inflation fight, the Fed also aimed to cool down a red-hot labor market.
Investors thought the Fed and other central banks were on track, even though inflation remained somewhat above their targets — in the Fed’s case, 2%. The European Central Bank and the Bank of England cut rates once and the Fed signaled it was prepared to start cutting rates in September.
Despite some signs of cooling, the U.S. economy kept chugging along even with higher rates, outpacing Europe and Asia. Then came last week’s economic reports.
Weak reports on manufacturing and construction were followed by the government’s monthly report on the job market, which showed a significant slowdown in hiring by U.S. employers. Worries that the Fed may have kept the brakes on the economy too long spread through the markets.
A handful of Big Tech stocks drove the market’s double-digit gains into July. But their momentum turned last month on worries investors had taken their prices too high and expectations for their profit gains had grown too difficult to meet -- a notion that gained credence when the group’s latest earnings reports were mostly underwhelming.
Apple fell more than 5% Monday after Warren Buffett’s Berkshire Hathaway disclosed that it had slashed its ownership stake in the iPhone maker. Nvidia lost more than $420 billion in market value Thursday through Monday. Overall, the tech sector of the S&P 500 was the biggest drag on the market Monday.
The Nikkei suffered its worst two-day decline ever, dropping 18.2% on Friday and Monday combined. One catalyst for the outsized move has been an interest rate hike by the Bank of Japan last week.
The BoJ’s rate increase affected what are known as carry trades. That's when investors borrow money from a country with low interest rates and a relatively weak currency, like Japan, and invest those funds in places that will yield a high return. The higher interest rates, plus a stronger Japanese yen, may have forced investors to sell stocks to repay those loans.
The prevailing wisdom is: Hold steady.
Experts and analysts encourage taking a long view, especially for investors concerned about retirement savings,.
“More often than not, panic selling on a red day is generally a great way to lose more money than you save,” said Jacob Channel, senior economist for LendingTree, who reminds investors that markets have recovered from worse sell-offs than the current one.
As of 4 p.m. Monday, the price of the world’s largest cryptocurrency was just above $54,000 — down from nearly $68,000 one week ago, per data from CoinMarketCap.
While bitcoin did serve as a safe haven of sorts during the worst of the pandemic, it mostly acts like any another risky asset that investors steer clear from during market downturns.
Greg McBride, financial analyst for Bankrate, points out that a 10% pullback in markets happens on average once every 12 months. The S&P 500 is down about 8.5% from its recent high.
Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, says investors should wait to see how the recent turbulence plays out.
“It remains to be seen whether this recent weakness in the labor market is the canary in the coal mine (in which case the selling is justified) or if it is just a temporary cooling of the job market (in which case this will prove to be another buying opportunity),” he wrote in a note to clients Monday.
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Cora Lewis and Wyatte Grantham-Philips in New York contributed to this report.
Specialist James Denaro, right, works at his post on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024. 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)
Trader Vincent Napolitano works on the floor of the New York Stock Exchange, Monday, Aug. 5, 2024. (AP Photo/Richard Drew)
MEDIA, Pa. (AP) — The Columbus Blue Jackets and NHL Commissioner Gary Bettman are among the mourners scheduled to attend the funeral service for John and Matthew Gaudreau, the siblings who died when they were struck by a suspected drunken driver while riding bicycles in their home state of New Jersey.
The memorial for the Gaudreau brothers was set for midday Monday at St. Mary Magdalen Catholic Church in Media, Pennsylvania. John, an All-Star for the Calgary Flames and Columbus Blue Jackets known as “Johnny Hockey,” and Matthew, who played collegiate hockey alongside his brother at Boston College, died on the eve of their sister's wedding.
Countless members of the hockey community from Columbus to South Jersey to Boston College, where the Gaudreaus played, are expected to join family and friends for the funeral. John was 31, Matthew 29.
The brothers have been mourned across the sports world, including Columbus, Ohio, where Gaudreau signed a free-agent deal in 2022 with the small-market Blue Jackets over more lucrative free-agent offers from other teams, including New Jersey. Fans and Blue Jackets players gathered last week for an emotional candlelight vigil and a similar gathering was held in Calgary.
Columbus Blue Jackets general manager Don Waddell said the entire team would be at the funeral. Bettman and former BC coach Jerry York were also expected to be among the many in attendance.
“The way they carried themselves around campus and the enjoyment that they had each and every day around the guys, they were really fun to be around,” Boston College associate coach Mike Ayres said. “They were both very, very talented hockey players but they were great people to be around and made everything around them fun.”
A GoFundMe for Matthew’s widow, Madeline, to support her and their baby due in December, has surpassed $600,000, with donations from nearly 9,000 people pouring in, many from NHL players and their families.
“He didn’t make the millions that Johnny did and doesn’t have the pension from the Players’ Association,” said Michael Myers of the ECHL’s Worcester Railers, for whom Matthew played two seasons. “It’s important that the hockey community recognizes that and embraces that to help Matthew’s family.”
The Gaudreau brothers were cycling on a road in Oldmans Township about 8 p.m. on Aug. 29 when a man driving an SUV in the same direction attempted to pass two other vehicles and struck them from behind, according to New Jersey State Police. They were pronounced dead at the scene.
Police said the driver, 43-year-old Sean M. Higgins, was suspected of being under the influence of alcohol and faces two counts of death by auto, along with reckless driving, possession of an open container and consuming alcohol in a motor vehicle. He has been jailed pending a Sept. 13 hearing.
The brothers have been celebrated on various social media platforms since their deaths. Katie Gaudreau, the little sister who was to be married the day after the brothers were killed, has posted pictures of her family in happier times on social media.
Over the weekend, it was an Instgram video captioned “Birds for the Gauderau boys," over a clip of John Gaudreau opening his winter coat to flash an Eagles jersey as he went through security ahead of an NHL game. She also posted a tribute to a family slideshow called “That day” where she wrote how she would “do anything to tell my big brothers I love them one more time.”
Devin Joyce, the expected groom and a collegiate hockey player, wrote of his promise “to take the absolute best care of your little sister.”
He added: “I know I never said it but I loved you guys so much. I'm so lucky to have called you two my brothers for as long as I did.”
Whyno reported from Washington.
AP NHL: https://apnews.com/hub/NHL
A memorial for Johnny and Matthew Gaudreau, who died last week when they were struck by a suspected drunken driver while riding bicycles, is shown in Salem County, N.J, Wednesday, Sept. 4, 2024.(Jessica Griffin/The Philadelphia Inquirer via AP)
Shown is a makeshift memorial for NHL hockey player Johnny Gaudreau and his brother Matthew who were killed by a suspected drunken driver as they bicycled on a rural road, Sept. 5, 2024, in Oldmans Township , N.J., Thursday. (AP Photo/Matt Rourke)
Fans attend a vigil for former Calgary Flames player Johnny Gaudreau and his brother Matthew in Calgary, Alberta, Wednesday, Sept. 4, 2024. (Jeff McIntosh/The Canadian Press via AP)
Columbus Blue Jackets player Cole Sillinger, center, reacts during the candlelight vigil to honor Columbus Blue Jackets hockey player Johnny Gaudreau, Thursday, Sept. 4, 2024, outside of Nationwide Arena in Columbus, Ohio. Gaudreau and his brother Matthew were killed by a motor vehicle last week while riding bicycles. (AP Photo/Joe Maiorana)
Shiloh Rivera, left, mourns with Hylas Stemen, center, and Amanda Rivera of Columbus, at a memorial set up by fans for Blue Jackets hockey player Johnny Gaudreau in Columbus, Ohio, Aug. 30, 2024. Gaudreau, along with his brother Matthew, was fatally struck by a motorist while riding his bicycle on Thursday. (AP Photo/Joe Maiorana)
A tribute to Johnny and Matthew Gaudreau is seen before a baseball game between the Philadelphia Phillies and the Atlanta Braves, Friday, Aug. 30, 2024, in Philadelphia. (AP Photo/Matt Slocum)
FILE - Quinnipiac goalie Michael Garteig (34) makes the save on a shot by Boston College forward Matthew Gaudreau (21) during the first period of an NCAA Frozen Four semifinal NCAA college hockey game Thursday, April 7, 2016, in Tampa, Fla. (AP Photo/Chris O'Meara, File)
Hylas Stemen, facing, of Columbus, hugs Dave Fetzer at a memorial set up by fans for Blue Jackets hockey player Johnny Gaudreau in Columbus, Ohio, Aug. 30, 2024. Gaudreau, along with his brother Matthew, was fatally struck by a motorist while riding his bicycle on Thursday. (AP Photo/Joe Maiorana)
FILE - Unted States' Johnny Gaudreau, right, challenges for a puck with Latvia's Janis Jaks during the preliminary round match between Latvia and United States at the Ice Hockey World Championships in Ostrava, Czech Republic, Tuesday, May 21, 2024. (AP Photo/Darko Vojinovic, file)
Boston College NCAA college hockey player Johnny Gaudreau celebrates his goal against Notre Dame during the third period of quarterfinal round match at the Hockey East Tournament in Chestnut Hill, Mass., March 15, 2014. (Matthew J. Lee/The Boston Globe via AP)
Flowers and memorabilia for former Calgary Flames player Johnny Gaudreau and his brother Matthew lie on the grass outside the Saddledome in Calgary, Alberta, Wednesday, Sept. 4, 2024. (Jeff McIntosh/The Canadian Press via AP)
Fans attend a vigil for former Calgary Flames player Johnny Gaudreau and his brother Matthewin Calgary, Alberta, Wednesday, Sept. 4, 2024. (Jeff McIntosh/The Canadian Press via AP)
FILE - Columbus Blue Jackets' Johnny Gaudreau (13) awaits the face-off during an NHL hockey game against the Nashville Predators, Saturday, March 9, 2024, in Columbus, Ohio. (AP Photo/Aaron Doster, file)
