Overreaction or rational? Here’s why the US stock market plunged Monday.
Investors slammed the sell button the morning of Monday, Aug. 5, with the Dow Jones Industrial Average sliding more than 1,000 points before the opening bell. The tech-heavy Nasdaq lost 6% while the S&P 500 was down more than 4% before the stock market opened.
The global sell-off started overseas in Japan with the Nikkei index having its worst day since 1987’s Black Monday crash. On Monday, the Nikkei plunged 12.4%.
It was Tokyo traders’ first chance to react to Friday’s U.S. jobs report, where unemployment unexpectedly spiked to 4.3%, triggering a U.S. recession indicator.
Japan’s rout was contagious and U.S. markets slid further Monday than their own initial reaction Friday, when the S&P fell 1.8%. On Monday, the market’s “fear index” surged to levels not seen since spring of 2020.
There is no doubt the sell-off is sparked by recession concerns from the jobs report and worries the Federal Reserve is way behind the eight ball when it comes to cutting rates.
“The Federal Reserve is at real risk of missing the boat, of being too late to the game when it comes to making sure that jobs continue to grow and that workers have good opportunities in the labor market,” former Acting and Deputy Labor Secretary Seth Harris told Straight Arrow News on Friday.
“We’re beginning to hear from folks on Wall Street, the R word, the discussion of recession,” Harris said. “Now, I don’t think that this report tells us that we’re headed for recession. But as folks on Wall Street begin to start talking about it, that can become a downward spiral as it becomes a decision-making point for businesses.”
“If you think that we’re going to shrink – if the economy is going to slow and shrink – you don’t invest in hiring people, you don’t invest in capital equipment, you don’t invest in expansion, you don’t invest in inventories,” Harris continued. “And so that is the concern.”
In the case Harris describes, negative conditions can become a self-fulfilling prophecy. Will cooler heads prevail? Many assessments of Monday’s sell-offs are that it is an overreaction to the data. But it is not just the labor market and Fed actions feeding into it.
For some time, investors worried tech stocks are overinflated this year, and over the weekend, Warren Buffett’s Berkshire Hathaway announced it sold nearly half its Apple stock in the second quarter. Apple started the day down 8% and dragged down Nvidia and other tech stocks with it.
Bitcoin also fell from around $62,000 Friday night to briefly under $50,000 Monday morning.
“Bitcoin doesn’t look like The New Gold,” Bloomberg Reporter Joe Weisenthal wrote. “It looks like 3 tech stocks in a trenchcoat.”
Putin, Kim sign comprehensive partnership agreement in North Korea
Russian President Vladimir Putin receives a grand welcome from North Korean leader Kim Jong Un as the two leaders strengthen their partnership. And tense moments during the White House briefing as someone appeared to faint as dangerous temperatures grip the nation’s capital. These stories and more highlight The Morning Rundown for Wednesday, June 19, 2024.
Putin, Kim sign comprehensive partnership agreement in North Korea
Russian President Vladimir Putin and North Korean leader Kim Jong Un signed a comprehensive partnership agreement on Wednesday, June 19, strengthening the ties between the two countries as Putin visits the north for the first time in 24 years. Putin was welcomed by Kim with a lavish ceremony filled with music and cheering crowds around midday local time.
The two then headed off for a summit where Putin thanked Kim for the North’s support in Russia’s war with Ukraine, adding Moscow is fighting the “imperialist policy” of the United States and its allies. In reply, Kim promised “full support and solidarity” to Russia in what he calls Russia’s “special military operation” in Ukraine.
The two leaders sat down for a two-hour meeting before signing the partnership agreement. Putin said the agreement includes a pledge that the nations help each other if either one is attacked.
The two countries are strengthening their relationship as both face multiple global sanctions — North Korea over its weapons program and Russia over the conflict in Ukraine.
U.S. officials believe North Korea is providing weapons to Russia in the war. Both Russia and North Korea deny those allegations.
U.S. soldier sentenced to nearly 4 years in Russian penal colony
A U.S. soldier has been sentenced to nearly four years in a Russian penal colony after being found guilty by a Russian court of stealing money from his girlfriend and threatening to kill her. Army Staff Sgt. Gordon Black was sentenced to three years and nine months Wednesday.
The judge also ordered black to pay 10,000 rubles (about $115) in damages.
According to Russian media, Black partially admitted guilt to theft charges but not to the threats.
Black’s case is just the latest to go to sentencing in a string of Russian arrests of Americans, including two the U.S. has declared as wrongfully detained: former Marine Paul Whelan and Wall Street Journal reporter Evan Gershkovich.
Person appears to faint from heat during White House press briefing
The record-breaking heatwave hitting the U.S right now is more than just sweltering — it’s downright dangerous. A scare at the White House in the middle of a daily press briefing is highlighting just how dangerous heat can be, even indoors.
White House press secretary Karine Jean-Pierre stepped off the podium Tuesday, June 18, to check on someone who appears to have overheated, before returning to the briefing.
AccuWeather is reporting the high temperature reached 94 degrees in Washington Tuesday. It’s also expected to get hotter as the week goes on, with the National Weather Service predicting a potential high of 99 degrees by Saturday, June 22.
The heat in D.C. is part of a bigger heatwave sweeping over the eastern U.S. right now. Meteorologists say around 270 million people will experience temperatures at or above 90 degrees this week.
The heat is not the only big severe weather event facing the U.S. right now. At least one person has been confirmed dead in New Mexico as two wildfires continue to burn.
The fires forced thousands to quickly flee their homes and fire officials say more than 500 structures have been destroyed by those fires so far.
However, forecasters said incoming cooler weather and the chance of rain could bring some relief this week to firefighters battling the blazes.
The Texas coast is under a tropical storm watch as what could soon become the first named storm of the 2024 Atlantic hurricane season approaches. The National Hurricane Center said heavy, potentially flooding rain is expected, with as much as 15 inches possible.
Los Angeles school district moves to ban cell phones during school day
People saying, “Back in my day, we weren’t using cell phones in school” may soon see that as a reality because of a case in the second-largest school district in America.
The Los Angeles Unified School District board moved forward with a plan Tuesday, June 18, to ban cell phones all day on campus. They said the devices distract students from learning, lead to anxiety and allowed cyberbullying.
“I’ve been struck in prior years just how our students are glued to their cellphones, not unlike adults,” school board member Nick Melvoin said. “They’re surreptitiously scrolling in school, in class time, or have their head in their hands, walking down the hallways. They’re not talking to each other or playing at lunch or recess because they have their AirPods in.”
The ban could soon spread even further. California Gov. Gavin Newsom, D, vowed Tuesday to severely restrict the use of phones during the school day statewide.
The move comes on the heels of the U.S. Surgeon General’s op-ed in the New York Times Monday, June 17, calling on Congress to approve “tobacco style” warnings on social media.
Nvidia becomes most valuable company in the world
Move aside Microsoft and Apple — Nvidia is now the most valuable company in the world. Propelled by its role in artificial intelligence, the computer chipmaker jumped to the top on Tuesday.
The company’s share price rose more than 3%, giving the company an overall market valuation of $3.34 trillion.
Nvidia controls approximately 80% of the market for chips used to power AI systems.
In the first quarter of the year, the company saw its revenue rise to $26 billion — up from $7 billion from 2023.
Baseball great Willie Mays passes away at 93
The baseball world is mourning the loss of one of the most legendary players of all time: Willie Mays. Mays passed away Tuesday in the Bay Area at 93 years old.
Nicknamed the “Say Hey Kid,” Mays spent 22 seasons in the big leagues, the majority with the Giants — both in New York and San Francisco.
He was part of the 1954 World Series championship team, highlighted by his over-the-shoulder catch during Game 1. That catch is considered to be the greatest in baseball history.
Among those remembering Mays is baseball Hall of Famer Derek Jeter, who called Mays “one of the best ever to play the game and even a better person.”
One of the best to ever play the game and even a better person. Thoughts and prayers are with Willie’s family and loved ones. https://t.co/kiyCbfBqOi
New Texas Stock Exchange takes on New York in stock market showdown
Texas is two-stepping on New York City’s territory with plans to open a competing stock exchange. TXSE Group announced Wednesday, June 5, that it raised $120 million in capital to start the Texas Stock Exchange. Financial heavyweights BlackRock and Citadel Securities backed the exchange.
Few buildings in New York are more iconic than the New York Stock Exchange, which is the largest stock exchange in the world by market capitalization and trading volume. Next in line is the Nasdaq, also headquartered in New York City. Texas wants to take them both on.
“TXSE will ultimately create more competition around quote activity, liquidity and transparency,” James Lee, founder and CEO of TXSE Group, said.
The Texas Stock Exchange would be a fully electronic, national securities exchange. The group said it plans to file registration documents with the U.S. Securities and Exchange Commission later this year.
A stock exchange is simply a marketplace where stock buyers connect with sellers. When a company goes public, it chooses what exchange to list with. But to get accepted at a particular exchange, the company has to follow the rules of that exchange and pay fees.
The Wall Street Journal said the proposed Texas Stock Exchange is “aiming to tap in to disaffection with increasing compliance costs at Nasdaq and NYSE and newer rules like one setting targets for board diversity at Nasdaq.”
TXSE Group said it believes it will be the most well-capitalized exchange entrant to file registration with the SEC. There used to be more regional exchange options, but most of those closed or folded into the effective duopoly of the NYSE and Nasdaq.
Once approved, TXSE will have the task of convincing companies to list on its exchange. According to Fortune, Texas is tied with New York for the second-most Fortune 500 companies headquartered in a state at 52. For the first time since 2014, California came out on top with 57.
Especially in recent years, Texas tried to entice more financial business to the state, whether it is companies moving headquarters there or reincorporating.
This year, Texas will launch a new business court system to challenge Delaware, America’s corporate home for more than a century. And they are doing so with a little public relations help from Elon Musk.
Trump’s Truth Social announces streaming plans, shares sink
Trump Media and Technology Group Corporation (TMTG), the operator of Truth Social, said on Tuesday, April 16, it is venturing into the streaming industry. However, the move was met with skepticism among investors. TMTG shares dropped 11% following the announcement. Shares were already down 70% from their peak in late March 2024.
This tumble on Tuesday followed an 18% drop on Monday, reflecting ongoing concerns about the company’s future. TMTG reported losses of $58 million in 2023, with revenue totaling just $4.1 million.
The shift to streaming raised additional concerns as streaming is a notoriously costly undertaking. Media giants like Disney struggle to turn a profit in the space.
However, Truth Social claimed it will provide unique content not found on traditional streaming platforms. It also said it would offer a space for information and entertainment that may be restricted elsewhere. The live streaming platform plans to scale up its content delivery network in three phases.
Phase one involves a content delivery network for streaming live TV to the app for Android, iOS and web. Phase two consists of over-the-top or OTT streaming apps for phones, tablets and other devices. The third phase will see the release of Truth Social apps to live TV.
TMTG stated that its new initiative represents its commitment to free speech by providing an option for creators struggling to find an audience. The company also said it would provide a space for creators it believed are being suppressed on other platforms.
Julian Klymochko, CEO of Accelerate Financial Technologies, expressed concerns that Reddit’s current reliance on volunteer moderation might not be sustainable with the additional regulatory oversight it faces.
“It’s like relying on unpaid labor when the company has nearly a billion dollars in revenue,” Klymochko said.
With Reddit’s revenue reaching $804 million in 2023, Klymochko believes the company must significantly invest in trust and safety initiatives, which could lead to a sharp increase in expenses.
Despite its nearly two-decade history, Reddit has encountered various challenges, including changes in leadership and dissatisfaction among its users. Although the company boasts 73 million active users, it has yet to achieve profitability, with losses increasing to $717 million from $467 million in 2021, the year it initially considered an IPO.
Nonetheless, Reddit’s shares jumped 48% in their New York Stock Exchange debut, a notable performance despite the company’s longstanding lack of profit.
Experts anticipate that Reddit will increase its expenditure on enhancing safety and trust measures, essential for maintaining advertiser relationships and removing inappropriate content.
NYPD steps up Times Square NYE security following protests, terror alert
In the wake of heightened security concerns surrounding the upcoming New Year’s Eve celebration in Times Square, Mayor Eric Adams has expressed apprehension about potential disruptions during the annual event. The city is on high alert due to the Middle East crisis and an increased terror alert, prompting the NYPD to intensify preparations.
Mayor Adams, a former police officer, drew attention to recent attempts by pro-Palestine protesters to interrupt city events, citing clashes during last month’s Christmas tree-lighting ceremony at Rockefeller Center.
Although no specific threats have been mentioned, Adams emphasized the need for readiness, especially after a teenager attacked two police officers with a machete during a previous New Year’s Eve celebration.
This year’s festivities are also marked by a court settlement requiring the NYPD to deploy fewer officers to public protests and banning the controversial “kettling” tactic.
The settlement, resulting from a lawsuit filed by Black Lives Matter protesters who alleged First Amendment rights violations during the 2020 protests, is now a source of concern for the mayor.
Adams, initially supportive of the settlement, has voiced worries about the restrictions on handling protests, particularly referencing recent pro-Palestine demonstrations. He stressed his belief that people should not be allowed to take over streets or disrupt the city’s functioning.
Lisa Zornberg, Adams’ chief counsel, clarified that the settlement includes a tiered system for responding to protests, with a prohibition on blocking critical infrastructure.
As preparations for the New Year’s Eve celebration unfold, concerns persist about potential disruptions.
Recent arrests during a protest near Rockefeller Center and social media posts hinting at a “Shut it Down” day of action on Dec. 31 have added to the apprehension.
Despite these concerns, opinions among locals are mixed, with some expressing support for protest causes but doubting their impact on security measures.
While the Times Square Alliance representative predicts the likelihood of someone attempting to disrupt events in Times Square, many tourists and revelers in the iconic location reportedly have little fear of trouble on the final night of 2023.
Residents, drawing on post-9/11 experiences, express confidence in the police department’s vigilance and security measures.
McCarthy: ‘I have not heard from White House’ in months as debt default nears
The biggest showdown expected in Washington this summer had a battle stop in New York. On Monday, Republican House Speaker Kevin McCarthy made his political pitch on the debt ceiling to the New York Stock Exchange during trading hours.
“Without exaggeration, American debt is a ticking time bomb that will detonate unless we take serious, responsible action,” McCarthy said.
After taking extraordinary measures to stretch U.S. funds in the meantime, the Treasury Department said the U.S. will officially default on its debt sometime between July and September if politicians fail to raise the $31.4 trillion debt ceiling.
“Let me be clear, there’s two things I will not do. I will not raise taxes and I will not pass a clean debt ceiling, that just won’t pass,” McCarthy said.
The White House and Democrats are pushing to raise the debt ceiling without conditions to avoid default.
“There is one responsible solution to the debt limit: addressing it promptly, without brinksmanship or hostage taking – as Republicans did three times in the last administration and as Presidents Trump and Reagan argued for in office,” White House Deputy Press Secretary Andrew Bates said in a statement.
An actual default on debt would create an “unfettered economic catastrophe,” according to economists at consulting firm RSM US. In that event, they estimate unemployment would soar above 12% in the first six months, it would trigger a deep and lasting recession and U.S. standing and the dollar would be at risk.
But so far negotiations are at an impasse. McCarthy revealed to Wall Street that he hasn’t spoken to the White House on the issue in more than two months.
“Had the president agreed to negotiate in good faith, we’d already be done. Unfortunately, I have not heard from the White House since our very first meeting,” he said.
And while he said the Democrats’ plan is a nonstarter, Republicans have yet to present their own proposal on paper to save the country from default.
“Okay, so here’s our plan,” McCarthy started. “In the coming weeks, the House will vote on a bill to lift the debt ceiling into the next year, save taxpayers trillions of dollars, make us less dependent on China, curve our high inflation, all without touching Social Security and Medicare.”
In exchange for lifting the ceiling for one more year, Republicans are expected to propose some type of cap on discretionary spending. McCarthy said Monday that out-of-control spending was to blame for inflation, which has led to the Federal Reserve’s tight monetary stance now squeezing the economy.
“It’s not a revenue problem. We’re bringing more money in percentage than anytime before, but we’re spending and there’s no curve on that,” he said. “So the Fed is their own entity, they get to make their own decisions, but they have to make decisions based on what we did to create inflation, so I have a responsibility to curve that so the Fed wouldn’t have to act.”
But two Republican bills McCarthy is behind and touted at the stock exchange would reportedly do the opposite over the next decade, according to the nonpartisan Congressional Budget Office. CBO reports that Republicans’ H.R. 1 bill to lower energy costs would increase the deficit by $2.4 billion over a 10-year period, while a vote earlier this year to repeal IRS funding would add $114 billion to the deficit by 2032.
Chaos on Wall Street after a technical issue caused certain stocks to come to a stop; Amazon launches prescription subscriptions; and animals are killing humans. These stories and more highlight the daily rundown for Tuesday afternoon, Jan. 24, 2023.
Trading issue pauses major stocks
Trading in dozens of stocks on the New York Stock Exchange was briefly halted after the market opened Tuesday morning. Major stocks impacted include Morgan Stanley, Verizon, AT&T, Nike and McDonalds.
Some sources say there were stocks with abnormally large moves when the market first opened which could have triggered volatility halts. The exchange itself is still investigating the issue and hasn’t said what caused the technical pause. Everything has since resumed back to normal.
Amazon launches prescription subscription
Amazon is expanding its push into health care. The company is now offering unlimited delivery of certain prescriptions for $5.00 a month. That low price includes the cost for delivery and about 50 different generic medications, like some antibiotics and anti-inflammatory drugs.
The drugs included in the “RXPass”program are medicines used to treat high blood pressure, hair loss, anxiety, acid reflux and about 80 other health conditions.
People on Medicaid or Medicare are not eligible. The program is available starting Tuesday in 42 states.
South Dakota governor personal cellphone hacked
The governor of South Dakota said her personal cellphone has been hacked after several hoax calls were made using her number. Republican Gov. Kristi Noem said she knows how it happened. She is blaming the hack on the House Jan. 6 Committee after they released documents that included her Social Security number.
It wasn’t just her personal information in the Jan. 6 leaked documents, there were nearly 2,000 Social Security numbers involved, many belonging to top Republicans.
Gov. Noem demanded an investigation then and is asking for one again since learning her phone number was hacked. “Callous mishandling of personal information has real world consequences. If you get such a phone call from my number, know that I had no involvement,” Noem said.
Violence among children surges
Incidents of kids killing other kids has increased since 2020. Violence among children has surged across the country after many decades of juvenile crime declining. The number of killings committed by kids under 14 was the highest in two decades.
In 2020, homicides committed by juveniles in the U.S. rose 30% from the year before, this percentage was only kids acting alone. The number of killings committed by groups of kids increased by 66%.
Animals killing people in freak accidents
A hunter was allegedly shot by his dog in Wichita, Kansas. Authorities say the dog stepped on the trigger of a rifle in the backseat of a pickup truck, killing his owner.
In Hong Kong, a butcher was killed by a pig that he was trying to slaughter. The 61-year-old was knocked to the ground by the pig and was cut by a meat cleaver during the struggle.