Market mayhem: From US to Japan, why stock markets are tanking?

Why did the stock markets tumble on Thursday? This question is looming large over the US economy, corporate world and Federal Reserve. Some stock market watchers believe it is a kind of reset as the Dow slipped more than 600 points, indicating a new phase in the US economy- a slowdown. Besides, the S&P 500 fell 1.5% and the tech-heavy Nasdaq Composite also tumbled by 2.5%. The downslide was so clear and widespread that Dow futures slipped 400 points or 0.1%, S&P 500 futures fell 1.2% and Nasdaq futures came down 1.8%. As if this is not enough, some experts apprehend further bloodbath on Friday as Amazon and Intel have already reported a fall in their earnings, reports CNN Business. They have also indicated that the transition to AI has proven costly, though its prospects remain uncertain.

US Economy remains strong

According to CNN Business, the US economy remains strong despite the stock market meltdown. Quoting a report on second-quarter gross domestic product, it has reported that the broadest measure of the US economy, is robust and it also shows consumer spending resilience. Besides, reports suggest that the housing data is expected to show signs of improvement, including tumbling mortgage rates. Besides, political development and upheaval have failed to impact it in a big way as Wall Street seems unfazed by Vice President Kamala Harris’ sudden rise to frontrunner status for the Democratic presidential nomination.

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Traders wait for a rate cut

Elaborating on the downfall of the stock markets on Thursday, CNN Business also reported that traders have been waiting for a rate cut for a long time, and now they have placed their bets on the Federal Reserve cutting rates in September. After Fed Chair Jerome Powell confirmed this on Wednesday, traders are waiting for the good news to arrive.

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What has Jerome Powell indicated?

Jerome Powell's indication of a possible rate cut is more important for those stocks, which have been rising over the past few months in hopes of a cut. They tumbled in a big way after their expectation was not fulfilled. Rate cuts help stocks because they lower borrowing costs for businesses and it can help boost profits.

FAQs

How did the US stock market fall on Thursday?
Dow slipped more than 600 points, indicating a new phase in the US economy- a slowdown. The S&P 500 fell 1.5% and the tech-heavy Nasdaq Composite also tumbled by 2.5%. The downslide was so clear and widespread that Dow futures slipped 400 points or 0.1%, S&P 500 futures fell 1.2% and Nasdaq futures came down 1.8%.

Why is the US stock market expected to fall further on Friday?
Some stock market experts apprehended further bloodbath on Friday as Amazon and Intel have already reported a fall in their earnings. They have also indicated that the transition to AI has proven costly, though its prospects remain uncertain.