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Dow Drops 1,000 Points: US Stock Market In Free Fall, Wiping Away Trillions In Capital

Investors hoping the major dip in the stock market last week was just a blip were greeted with even more losses on Monday, Aug. 5, as fears of a recession and global turmoil sent stocks tumbling.

Stock markets around the world tumbled on Monday, Aug. 5, over fears of a US recession. 

Stock markets around the world tumbled on Monday, Aug. 5, over fears of a US recession. 

Photo Credit: Unsplash/Anne Nygård

The Dow Jones Industrial Average fell 1,200 points at one point but closed 1,000 down. The S&P 500 dropped more than 3 percent and the Nasdaq fell 3.4 percent. 

The massive sell-off began on Friday after a US jobs report showed that employer hiring in July had slowed more than analysts had predicted. Investors were already on edge over fears the US Federal Reserve had left interest rates at their 23-year-old high for too long, CNN reported

Despite the US economy growing last year, analysts at Goldman Sachs said Monday that there is a 25 percent chance for a recession within the next 12 months, the report continued. 

The VIX — sometimes called the fear index — which tracks expected stock market volatility briefly peaked on Monday, matching March 2020 numbers seen during the height of the COVID-19 pandemic fears. 

The bleeding wasn't contained in the United States. Those fears rocked markets across the globe. 

Japan's Nikkei index dropped 12.4 percent Monday, its worst day of trading since 1987's "Black Monday," per CNBC

The cryptocurrency market was also not immune. Bitcoin fell from a high of $62,000 to just over $53,000 as of 4 p.m. Ethereum dropped 10 percent to $2,400.

However, many people said investors shouldn't overreact or read too deeply into the recent setbacks. Journalist Christopher Colt called it a Monday's fall a simple "correction."

We are long overdue for a correction in the stock market. Please ignore everyone panicking and saying we're doomed. The goal of higher interest rates was literally to slow down an overheated economy. Mission accomplished. I've seen nothing to indicate the bottom is falling out. Everyone just take a few deep breaths and relax.

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