Nasdaq 100: Tech Stocks Plunge as Recession Fears Rock Markets

Global Markets Plummet on Recession Fears

Global financial markets are experiencing a severe sell-off, with U.S. stocks leading the decline as recession fears grip investors. The rout has spread across asset classes, affecting equities, bonds, cryptocurrencies, and commodities.

At 12:52 GMT, Dow Futures are trading 38793.00, down 1086.00 or -2.72%. S&P 500 Index Futures are at 5169.50, down 206.50, down 3.84% and Nasdaq 100 Index Futures are trading 17588.75, down 967.50 or -5.21%.

Stock Market Carnage

U.S. stock futures point to significant losses at the open. Dow Jones Industrial Average futures dropped 3.1%, S&P 500 futures fell 4.3%, and Nasdaq-100 futures plunged 5.7%. This follows Friday’s disappointing July jobs report, which intensified concerns about a potential U.S. recession.

The tech sector is bearing the brunt of the sell-off. Nvidia tumbled 13%, Apple cratered more than 8%, and Tesla fell 7%. The once-hot artificial intelligence trade is unwinding rapidly.

Overseas, Japan’s Nikkei 225 plummeted 12.4%, its worst day since the 1987 Black Monday crash. European markets also suffered, with the Stoxx 600 down 2.6%.

VIX Spikes to Four-Year High

The CBOE Volatility Index (VIX), often referred to as the market’s “fear gauge,” surged 72% to its highest level in nearly four years. The index climbed above 40 for the first time since October 2020, reflecting heightened investor anxiety and expectations of increased market turbulence. This sharp rise in the VIX underscores the severity of the current market sell-off and suggests that traders anticipate continued volatility in the near term.

Economic Concerns

Investors worry that the Federal Reserve is behind in cutting interest rates to support a slowing economy. The central bank’s decision to keep rates at a two-decade high last week has exacerbated these concerns.

The bond market reflects these fears, with the 10-year Treasury yield falling to 3.76%, its lowest level in a year. This drop indicates a flight to safety as investors seek refuge from market turbulence.

Currency and Crypto Turmoil

The Japanese yen has strengthened significantly against the dollar, ending the “carry trade” that had supported global asset prices. Bitcoin plummeted from nearly $62,000 on Friday to around $52,000 on Monday, dragging crypto-related stocks down with it.

Market Forecast

The short-term outlook for global markets remains decidedly bearish. With recession fears mounting and the unwinding of speculative positions, further volatility is expected. Investors should brace for potential additional downside in stocks and risk assets.

Safe-haven demand may continue to support bonds, while the yen could see further strength against major currencies. As markets digest these developments, traders should remain cautious and prepare for increased volatility across all asset classes in the coming days and weeks.

Technical Analysis

E-mini Nasdaq-100 Index futures are currently testing the 50% to 61.8% retracement zone formed by the October bottom at 14858.50 and the July top at 20983.75.

The market is also trading on the weakside of the 200-day moving average at 18161.14 and the 50-day moving average at 19677.38, which are new resistance levels.

Watch the price action and read the order flow inside the retracement zone. Regaining the upper or 50% level at 17858.50 could trigger an intraday short-covering rally, while a failure to hold 61.8% at 17198.25, means more selling is coming.