Stocks on Wall Street experienced a sharp decline at Thursday’s opening bell, driven by mounting indications of an overheating US economy, which led investors to anticipate a prolonged period of elevated interest rates set by the Federal Reserve. The Dow Jones Industrial Average held steady, while the S&P 500 saw a 0.7% dip, and the technology-centric Nasdaq Composite witnessed a significant drop of over 1.5%. Notably, Apple Inc. shares took a nosedive, plummeting more than 4%.
The market downturn was triggered by an unforeseen surge in US services activity, which reached a six-month high in August. This unexpected surge is seen as a testament to the resilience exhibited by consumers and the broader economy in the face of escalated borrowing costs. The upswing in Treasury yields had previously applied pressure on technology stocks but saw some alleviation on Thursday.
In a further blow to Apple, stocks continued their descent following reports that China has prohibited government officials from using the company’s iPhones, and intends to extend this ban to state-owned enterprises. This development casts a shadow on the tech giant’s largest foreign market, which also serves as its global production hub.
Meanwhile, oil prices experienced a retreat after China’s trade figures failed to assuage concerns about a sluggish performance in the world’s second-largest economy. This has prompted a surge in questions regarding whether China’s slowdown could potentially have adverse repercussions on the US economy.
The upcoming release of US initial jobless claims data is poised to play a crucial role in the ongoing debate over whether the Federal Reserve will maintain high interest rates at its forthcoming September meeting. Surprisingly robust, the latest figures depict the claims at their lowest levels since February, potentially signaling a robust labor market.
Coupled with a fresh wave of disheartening economic data emanating from Europe, these statistics amplify apprehensions surrounding a global downturn in demand. Overall, the decline in stocks on Wall Street underscores mounting concerns among investors, fueled by signals of heightened US economic activity and the specter of prolonged high interest rates.
Source: Yahoo Finance
