The U.S. stock market experienced a significant decline on Monday morning, amidst a global selloff fueled by fears of a potential U.S. recession. The Dow Jones Industrial Average plummeted by 1,072 points, or 2.7 percent, shortly after the market opened at 9:30 a.m. ET. This drop followed a 611-point loss on Aug. 2. The S&P 500 also fell by 4.1 percent, while the Nasdaq Composite saw a notable decline of 6.3 percent.
The most substantial point drop in the history of the Dow Jones occurred during the early stages of the COVID-19 pandemic when it plunged by 2,997 points on March 16, 2020, representing a 12.9 percent decrease. The worst crash in U.S. stock market history, aside from the Great Depression in 1929, occurred on Oct. 19, 1987, known as “Black Monday,” when the Dow Jones plummeted by 22.6 percent.
The global impact was evident as Japan’s Nikkei 225 index dropped by about 12 percent, marking its most significant decline in history, while Japan’s Topix index fell by 12.2 percent. Yields on U.S. government bonds reached multi-month lows, with the 10-year note at 3.68 percent and the two-year at 3.69 percent.
A combination of factors, including a weak jobs report from the U.S. Department of Labor, shrinking manufacturing activity, and pessimistic forecasts from top U.S. technology companies, contributed to the market downturn. Analysts at Goldman Sachs and JPMorgan expressed varying degrees of concern about the possibility of a U.S. recession, with differing probabilities assigned to the scenario.
The Federal Reserve’s response to the economic situation was closely watched, with expectations of potential rate cuts to alleviate market concerns. Chicago Fed President Austan Goolsbee emphasized the central bank’s commitment to addressing economic weaknesses and maintaining stability.
Despite recent economic indicators pointing to challenges, Goolsbee remained cautious about predicting a recession. The potential impact of a recession on the ongoing 2024 presidential election was also highlighted, with former President Donald Trump attributing the market decline to the current administration. Please rewrite this sentence.
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