Wall Street Tumbles, Yen Surges, Oil Sinks Below $70, VIX Spikes As Traders Brace For Volatile Month: What's Driving Markets Tuesday?

Author: Piero Cingari | September 03, 2024 02:01pm

The first trading session of September started with a widespread selloff across risk assets, as traders took a cautious approach ahead of what is historically a volatile month for global markets.

At 1 p.m. in New York, the S&P 500 had dropped 1.6%, while small-cap stocks nosedived 2.7%. The Magnificent Seven, tracked by the Roundhill Magnificent Seven ETF (NYSE:MAGS), offered no safe haven, declining 2.3%.

The CBOE Volatility Index (VIX), often referred to as Wall Street’s “fear gauge,” surged by 20%, reflecting heightened anxiety among investors.

Tech stocks were hit hard, with the Nasdaq 100 down 2.5%, on track for its worst one-day drop since Aug. 1.

Tuesday’s selloff was reminiscent of the market turmoil caused by the unwinding of the yen-dollar carry trade earlier in the summer. This time, the yen jumped 0.8% against the dollar after hawkish comments from Bank of Japan Governor Kazuo Ueda overnight.

Despite the yen’s strength, the U.S. dollar gained 0.2% against a basket of other currencies, buoyed by broader market movements.

On the economic front, U.S. manufacturing data for August showed a deeper-than-expected contraction, with the employment index indicating mounting challenges ahead of a crucial jobs report due later in the week.

Treasury yields fell as the weak manufacturing data fueled speculation of potential interest rate cuts by the Federal Reserve. The yield on the two-year Treasury note, which is sensitive to policy changes, dipped 3 basis points, while the 10-year Treasury note yield dropped 7 basis points. The iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) rose 1.2%.

In commodities, gold prices slipped 0.5%, while oil prices plunged more than 4%, marking the steepest one-day decline since October 2023. West Texas Intermediate (WTI) crude oil fell to levels not seen since early January 2024, driven by concerns over weaker demand and expectations of increased OPEC supply next month.

Cryptocurrency markets also faced pressure, with Bitcoin (CRYPTO: BTC) down 2.5% as overall sentiment remained weak.

Tuesday’s Performance In Major US Indices, ETFs

Major Indices	Price	1-day change (%)
Dow Jones	41,057.56	-1.2%
S&P 500	5,557.61	-1.6%
Nasdaq 100	19,102.46	-2.4%
Russell 2000	2,160.05	-2.7%
CBOE VIX	18.54	19.2%

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust (NYSE:SPY) was 1.5% lower to $555.15.
• The SPDR Dow Jones Industrial Average (NYSE:DIA) fell 1.1% to $411.80.
• The tech-heavy Invesco QQQ Trust Series (NASDAQ:QQQ) tumbled 2.4% to $45.16.
• The iShares Russell 2000 ETF (NYSE:IWM) sunk 2.6% to $214.30.
• The Consumer Staples Select Sector SPDR Fund (NYSE:XLP) outperformed, up by 1%, while the Technology Select Sector SPDR Fund (NYSE:XLK) tumbled 3.5%.

Monday’s Stock Movers

• Among mega-cap stocks, Nvidia Corp. (NASDAQ:NVDA) plummeted 7.6%, marking the worst one-day drop since April.
• Other major chipmakers also tanked including Marvell Technologies Inc. (NASDAQ:MRVL), down 7.3%, Micron Technology (NASDAQ:MU), down 6.5%, Advanced Micro Devices Inc. (NASDAQ:AMD), down 6%, and Taiwan Semiconductor Manufacturing Company (NYSE:TSM), down 5.7%.
• Intel Corp. (NASDAQ:INTC) fell 7.5% amid news that the stock might be removed from the Dow Jones index.
• Boeing Company (NYSE:BA) tumbled almost 8% after Wells Fargo downgraded the stock to an Underweight rating and slashed its price target.

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Bear market illustration generated using artificial intelligence via Dall-E.

Posted In: $BTC AMD BA DIA INTC IWM MAGS MRVL MU NVDA QQQ SPY TLT TSM XLE XLK XLP