Recession fears were revived among US investors on Tuesday, who liquidated their stock holdings en masse. Major stock indices plunged in the biggest decline this year since the crash in early August. Technology stocks led the sell-off, with NVIDIA shares suffering a monumental sell-off.
The hydrocarbon market, specifically the oil market, also suffered a sharp decline. The latter was probably motivated by the prospect of the return of Libyan crude oil to international markets. Amid this negative environment, the prices of the main cryptocurrencies also turned red.
Stock indices collapsed on Tuesday
The nightmare that was the stock market crash on Tuesday began with the release of the manufacturing PMI data for August. Although this indicator rose last month compared to the eight-month lows of July, the overall trend in the manufacturing sector remains bad. This state of moderation does nothing to improve the economic outlook.
To give an idea of the weak state of the manufacturing sector, it stands out that in July it reached 46.8, which was the lowest point since November. Meanwhile, in August the improvement was barely perceptible, with 47.2. The fact that it fell below 50 becomes a discouraging sign for investors.
The stock market reacted negatively, given that this ISM index represents no less than 10.3% of the US economy. This explains why the S&P 500 fell by 2.12%. The blue-chip benchmark is now down 2.5% from its historic highs of mid-July.
On the other hand, technology stocks took an even bigger beating, with the Nasdaq Composite losing 3.26%. Notably, this is the biggest drop since early August for this indicator. Meanwhile, the Philadelphia Semiconductor Index lost a whopping 5%.
As can be seen, most stock indices plummeted dramatically.
S&P 500 experienced the biggest drop since early August. Source: Google Finance
Other crucial data is approaching
The ISM manufacturing data was released just hours after the non-farm payrolls release. The latter will be crucial for markets and could have a lot to say about the possible recession in the world’s largest economy.
Basically, Friday’s results could motivate the Fed to cut or maintain the interest rate. As you can see, these are macroeconomic elements of great importance. Therefore, it is logical that nervousness takes hold of the financial markets.
Along with the benchmarks, cryptocurrencies also suffered a bitter fall. At the time of writing, the price of Bitcoin lost 2.65% in 24 hours. Meanwhile, its price lost the $58,000 per token barrier.
Bitcoin also experienced a strong pullback on Tuesday. Source: CoinMarketCap
Oil prices also fell today
Oil prices fell significantly on Tuesday due to the possibility of a deal to restore Libyan supplies. This diverted attention to concerns about low supply and excessive global demand for crude oil. It could also impact OPEC+ plans to increase production for October.
West Texas Intermediate (WTI) crude oil was trading at around $70 per barrel, down more than 4% since Friday’s close. Brent crude oil was trading below $74 per barrel.
Simply put, the market could be flooded with black gold in the coming months, and this is enough to make futures traders liquidate.
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