Global Markets Plunge as Panic Grips Investors Worldwide

Selloff rocks the globe as markets start the week in panic mode (NYSEARCA:SPY)

Thought last week was bad? Think again. There's some serious carnage out there, and the fallout is quickly spreading across the globe. Investors can really use some soothing words from central bankers right now, especially from a Fed that's being seen as falling behind the curve (remember how things went for markets in 2022?). A disappointing jobs report on Friday indicated that Powell and Co. should have likely cut rates at their July gathering last week, and sentiment has quickly shifted from a soft to a hard landing- or even an emergency landing. Flashing red: Monday's bloodbath started in Japan, where the Nikkei 225 Index (NKY:IND) plunged 13.2% for its worst session since the 2011 Fukushima nuclear meltdown. Adding to the concerns were the BOJ's steps toward policy normalization, and it has translated into Japan's world-beating rally this year being wiped out over the last several sessions. Circuit breakers were also activated for South Korea's Kospi (KOSPI) after the index rapidly dropped 8%, while Australia's ASX 200 (AS51) slid nearly 4% for its worst session since June 2022. Major market indices like the FTSE 100 (UKX), CAC 40 (CAC:IND) and DAX (DAX:IND) also tumbled in Europe, and over in the U.S., traders are also set to open the week by pressing the panic button. S&P 500 (SP500) futures are off by 3% at the time of writing, while contracts linked to the Nasdaq 100 (NDX) are down by a whopping 5.7%. The index already fell into correction territory last week following an overheated AI rally, and news that Berkshire's Warren Buffett sold off half of his massive stake in Apple has not helped the situation for tech stocks. Safe havens like gold (XAUUSD:CUR) and bitcoin (BTC-USD) are also failing to catch a bid as the sell-everything mentality takes hold and no one appears willing to catch a falling knife just yet. That's not all: Rising geopolitical tensions aren't making the investing landscape any better, with President Biden meeting with his national security team in the situation room ahead of an anticipated Iranian attack against Israel. It could also include a coordinated front with Hezbollah in Lebanon and/or the Houthis in Yemen, in a serious escalation that could begin as early as Monday. Fears of a regional conflict have prompted the U.S. to deploy additional military might in the Middle East, including Navy cruisers and destroyers, as well as a new squadron of fighter aircraft. More on markets Is It Time To Turn Intermediate Term Bearish On Stocks? Fed Needs To Cut Rates Immediately S&P 500: Quantifying The Prospects For A Lost Decade TLT: This Changes Everything Don't Let The Fed Fool You

The Market Meltdown Intensifies

What might the Fed do now? Stocks, cryptocurrencies, the dollar, oil -- they're all down sharply again on Monday on concerns that the U.S. economy is slowing faster than expected. It comes after a rough week for global markets. That has reignited criticisms that the Fed is moving too slowly to cut rates as economic conditions look shakier. Here's the latest: S&P 500 futures were down 3 percent on Monday. Mega-cap tech stocks, which have driven much of the market's gains this past year, were especially bruised: Nvidia was down 11 percent premarket, while Apple was off 7.5 percent. (Adding to the jitters was Berkshire Hathaway again cutting its stake in Apple and Nvidia reportedly delaying shipments of its most advanced A.I. chip.) Japan was especially hard hit. The Nikkei 225 fell more than 12 percent, battered by concerns about tech stocks and worries that the Bank of Japan moved too quickly in raising interest rates last week. Bitcoin tumbled more than 10 percent, wiping out more than $100 billion in value off the volatile digital currency. Brent crude, the global benchmark, fell despite growing tensions in the Middle East. Investors fled to safe-haven assets, helping lift sovereign bonds. The yield on the 10-year Treasury note fell to a one-year low. (Bond prices rise when yields fall.) Goldman Sachs economists this weekend raised the odds of a U.S. recession in the next year to 25 percent from 15 percent; they cautioned that such a risk was "limited." But the Goldman note -- along with recent disappointing earnings results, and lackluster economic reports including Friday's jobs report -- have compounded global fears that the U.S. is headed for a hard landing. All this has stoked speculation that the Fed will need to take bold action, such as a prodigious half-percentage point cut next month or an exceedingly rare emergency cut within the next week. Criticisms of the Fed are getting louder, especially from the I-told-you-so crowd. "The Federal Reserve has been late in cutting rates, but that has been true for some time," Paul Donovan, a UBS economist, wrote in a client note on Monday. "The policy error is making things worse for lower income households." Companies have been warning for some time that lower-income consumers are pulling back, muddying their profit outlooks. "The tone for companies on earnings calls will be key to watch in the coming weeks," Lori Calvasina, the head of global equity research at RBC Capital Markets, wrote in a note on Sunday.