The latest on the market turmoil
- U.S. stocks are set for their worst open of the post-pandemic era, adding to a recent dip that has reflected concerns about the national and global economic outlook.
- Stocks in Asia plunged, with Japan stocks declinining as much as 12.4%, the worst showing since 1987’s “Black Monday.”
- Europen markets are down but not as bad, with the closely watched FTSE100 down about 3% on Monday morning.
Chicago Fed President Goolsbee says if economy deteriorates, Fed will ‘fix it’
Chicago Federal Reserve President Austan Goolsbee today vowed that the central bank would react to signs of weakness in the economy and indicated that interest rates could be too restrictive now.
Asked whether weakening in the labor market and manufacturing sector could prompt a response from the Fed, he did not commit to a specific course of action but said it doesn’t make sense to keep a “restrictive” policy stance if the economy is weakening.
“The Fed’s job is very straightforward, maximize employment, stabilize prices and maintain financial stability. That’s what we’re going to do,” the central bank official said during an interview on CNBC’s “Squawk Box” program. “We’re forward-looking about it. So if the conditions collectively start coming in like that on the through line, there’s deterioration on any of those parts, we’re going to fix it.”
Dow futures down 1,200 points
The Dow Jones Industrial Average is set to open down some 1,200 points, or at least 3%. That’s something it hasn’t done since the drawdowns that kicked off the global Covid pandemic in March 2020.
Krugman: ‘Real case for an emergency cut soon.’
Paul Krugman, a Nobel Prize-winning economist and New York Times columnist, said today that market turmoil could create the need for an emergency Fed rate cut.
“So, even though I’ve been arguing for rate cuts — 50 in September for sure — I wasn’t calling for an inter-meeting cut, because that might signal panic,” he wrote on X. “But since we may be seeing a panic anyway, that argument loses its force. Real case for an emergency cut soon.”
Wall Street’s ‘fear gauge’ rises to highest level since 2020 pandemic market plunge
A key measure of expected volatility in the stock market surged to its highest level in more than four years on Monday morning as as global equities fell sharply.
The Cboe Volatility Index, or VIX, broke above 50 on Monday, up from about 23 on Friday and roughly 17 a week ago.
This is the highest the VIX has been since hitting an intraday high of 57.24 on April 2, 2024, shortly after the Federal Reserve’s emergency actions during the Covid 19 pandemic, according to FactSet. The VIX rose as high as 85.47 in March 2020, according to FactSet.
Wharton economist calls for Fed to issue emergency rate cut
Jeremey Siegel, a professor emeritus of finance at the Wharton School of the University of Pennsylvania, on Monday called on the Federal Reserve to make an emergency cut of 75 basis points in the federal funds rate after Friday’s disappointing jobs report.
In addition, there should be “another 75 basis point cut indicated for next month at the September meeting — and that’s minimum,” Siegel said on “Squawk Box” Monday.
“The fed funds rate right now should be somewhere between 3.5 and 4%,” he said.
The Federal Reserve kept interest rates at 5.25% and 5.5% after its meeting last week. On Friday, the jobs report showed slower growth than expected and an unemployment rate that moved higher to 4.3%, its highest since October 2021.
Crypto market hit hard
It’s not just stocks. The crypto market is also reeling.
Bitcoin, which had already been on the downswing, has declined about 17% in the last 24 hours. It’s now down about 28% in the past week, according to crypto platfor Coinbase.
Japan’s Nikkei stock index drops 12%
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Japan’s Nikkei Index, which tracks 225 public companies, dropped more than 12% on Monday. It’s the worst decline since 1987’s “Black Monday,” which is one of the worst global stock market crashes on record.
The Nikkei also erased all its gains so far this year, moving into a loss position year to date.
The broad-based Topix also saw a rout as it tumbled 12.23% and closed at 2,227.15.
American recession fears spark huge Japan sell-off, point to lower U.S. open
Rob Wile is a Pulitzer Prize-winning journalist covering breaking business stories for NBCNews.com.
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