The stock market downturn on August 7, 2024, was influenced by several factors, including global economic concerns and disappointing corporate earnings. Here are some key reasons for the decline:
1. **Recession Fears in the U.S.:**
The U.S. markets faced a significant sell-off due to increasing fears of a recession. A weak jobs report in July, which showed a lower-than-expected increase in non-farm payrolls, fueled these concerns. The unemployment rate rose unexpectedly, triggering recession warnings according to the Sahm Rule, a historically reliable recession indicator
2. **Tech Sector Weakness:**
The "Magnificent Seven" tech companies, including Apple, Nvidia, and Tesla, experienced substantial stock price declines. These declines were driven by underwhelming earnings reports and growing skepticism about the sustainability of the AI boom, which had previously boosted these stocks.
3. **Global Economic Concerns:**
The global markets were also affected by an unexpected interest rate hike in Japan, which led to a sharp decline in Japanese stocks and increased volatility in other Asian markets. The interconnectedness of global markets meant that these changes had a ripple effect on U.S. and other international markets.
4. **Geopolitical Tensions:**
Escalating geopolitical tensions, particularly in the Middle East, added to the market's anxiety. This instability contributed to the broader sell-off across various asset classes, including equities and commodities ).
Overall, the combination of economic, corporate, and geopolitical factors created a perfect storm, leading to significant declines in global stock indices on August 7, 2024.
