(FreePressBeacon.com) – Fearing a looming recession due to the Federal Reserve (Fed)’s inaction, U.S. investors rushed to sell off their stocks on Wall Street.
They were driven by concerns over a cooling job market, a slowdown in manufacturing and fears that the Fed may have delayed interest rate cuts too long.
The Dow Jones Industrial Average dropped nearly 500 points, or about 1.2%, while the S&P 500 fell 1.3%.
In particular, the technology sector saw a significant sell-off following a string of poor performances from major tech companies.
This downturn followed a brief recovery after Meta posted second-quarter earnings that exceeded expectations, which initially boosted the tech-heavy Nasdaq by 2.3%.
However, the downturn rеsumed after the market closed, as Intel announced it was slashing 15,000 jobs and Amazon reported underwhelming results.
Two pieces of economic data seemed to unsettle the market further. A report from the Institute for Supply Management (ISM) revealed that manufacturing activity had dipped to an eight-month low in July.
Additionally, the number of Americans filing for new unemployment benefits reached an 11-month high last week.
“The ISM is really what started the ball rolling today, and then selling causes more selling,” observed New York-based Ingalls & Snyder senior portfolio strategist Tim Ghriskey.
Despite the sell-off, the stock market has experienced a strong year overall, with the S&P 500 and Nasdaq up 14.3% and 16% respectively.
The day before, both indexes saw their most significant daily percentage gains since February due to a rally in chip stocks after the Fed decided to maintain steady interest rates.
This decision came one day after the Federal Reserve announced it would keep rates at a two-decade high until at least September.
While many investors expected this hold, they are hopeful for a rate cut as soon as next month.
Federal Reserve Chair Jerome Powell stated that the central bank might reduce rates soon, but any decision would depend on inflation rates remaining stable over the summer.
Specifically, June’s inflation ratе was 3%, one of the lowest since 2021, while unemployment was 4.1%, the highest since 2021. The Fed’s next assembly is scheduled for September 20.
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