Market Turbulence: Crisis Mood Weighs on Tech Giants and Desperate Investors

The global financial markets experienced significant declines again on Monday, driven by concerns that the U.S. economy is faltering faster than expected. This development follows an already tough week for global markets and brings new criticism of the Fed's hesitant interest rate cut policy. S&P 500 futures recorded a 3 percent decline. Technology giants in particular, which accounted for a significant portion of market gains last year, suffered heavy losses: Nvidia shares fell 11 percent in pre-market trading, while Apple declined by 7.5 percent. Adding to the uncertainty was Berkshire Hathaway's further reduction of its stake in Apple and reports that Nvidia allegedly delayed the shipment of its most advanced AI chip. Japan was hit particularly hard by the recent market slumps. The Nikkei 225 lost more than 12 percent, weighed down by concerns about technology stocks and worries that the Bank of Japan raised interest rates too quickly last week. Bitcoin also recorded a drastic drop of over 10 percent, wiping out more than 100 billion USD in value from the already volatile digital currency. Brent crude oil, the global benchmark, also fell despite increasing tensions in the Middle East. Investors sought refuge in perceived safer assets, leading to a rise in bond prices. Consequently, the yield on the ten-year U.S. Treasury fell to a one-year low, as bond prices rise when yields fall. Goldman Sachs economists increased the probability of a U.S. recession within the next year from 15 to 25 percent over the weekend, warning that this risk was “limited.” Nevertheless, the Goldman forecast, combined with disappointing earnings reports and weak economic indicators including the labor market report, further fueled global fears of a hard landing for the U.S. economy. This has sparked speculation that the Fed might take drastic measures, such as a significant rate cut of half a percentage point next month or even a rare emergency cut within the next week. Criticism of the Fed is increasing, especially from those who had long warned of the current developments. "The Federal Reserve was late to cut rates, and it has been that way for some time," wrote UBS economist Paul Donovan in a client note on Monday. "The policy error is exacerbating the situation for low-income households." Companies have been warning for some time that low-income consumers are cutting back on spending, clouding earnings forecasts. “The tone on company earnings calls will be crucial in the coming weeks," added Lori Calvasina, Head of Global Equity Research at RBC Capital Markets, in a Sunday note.