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Stocks sold off Thursday, with the Dow Jones Industrial Average tumbling nearly 500 points, as investors’ fears over a recession surfaced.

The Dow dropped 494 points, or 1.2%. The S&P 500 shed 1.4%, while the Nasdaq Composite slipped 2.3%. The Russell 2000 index, the small-cap benchmark that has rallied lately, dropped 3%.

Some fresh data raised the specter of an economic contraction and the notion that the Federal Reserve could be too late to start cutting interest rates.

Initial jobless claims rose the most since August 2023. And the ISM manufacturing index, a barometer of factory activity in the U.S., came in at 46.8%, worse than expected and a signal of economic contraction.

The 10-year Treasury yield broke below 4% for the first time since February in a sign that more investors were seeking safe-haven assets.

That weak data comes a day after the Fed chose to keep rates at the highest levels in two decades.

While Fed Chair Jerome Powell did give some investors hope by signaling a September rate cut was on the table, it was not enough for market participants Thursday.

“The economic data keep rolling on in the direction of a downturn, if not recession, this morning,” said Chris Rupkey, chief economist at FWDBONDS, a financial market research company. “The stock market doesn’t know whether to laugh or cry because while three Fed rate cuts may be coming this year and 10-year bond yields are falling below 4.00%, the winds of recession are coming in hard.”

Shares in companies that would likely suffer the most during a recession saw some of the biggest declines, including JPMorgan Chase, which lost 2%, and Boeing, which fell more than 5%.

Stocks began the day on a high note, as Facebook parent Meta Platforms rallied more than 4% on stronger-than-expected second-quarter results and upbeat guidance.

But Meta was one of the few stocks in the green as the trading day went on.

Even stocks such as Nvidia, which has soared for much of the year, were feeling the pain, with the artificial intelligence chip leader off 8% as investors overall may be taking some figurative chips off the table into what could be a more volatile time for the market with a November election around the corner.

The S&P 500 is still up about 14% for the year, coming off its eighth-positive month in the last nine in July.

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