US Futures Tumble Amid Economic Fears

US stock futures are set for a sharp decline on Monday for the third consecutive session as investor anxiety about the US economy intensifies. The July jobs report, revealing an unexpected rise in the unemployment rate to 4.3%, has heightened these concerns. Dow futures dropped by 600 points (1.5%), S&P 500 futures fell by 2.7%, and Nasdaq futures plunged by 4.5%.

The Nasdaq has been particularly hard-hit, with investors re-evaluating the lofty valuations assigned to artificial intelligence technologies. The initial optimism that AI would drive significant profits buoyed tech stocks, leading to repeated market records this year.

However, as AI profits now appear far off and the economic outlook uncertain, investors are retreating. This shift is exemplified by Warren Buffett's reduction ofBerkshire Hathaway's stake in Apple by half.

Despite the robust second-quarter growth in the US, the rising unemployment rate suggests potential economic trouble. Investors are moving towards safer assets, selling stocks in favor of bonds. The 10-year Treasury yield, which inversely correlates with bond prices, dropped significantly to 3.74%, down from 4% at the start of the month.

What Does This Mean for Me?

Globally, Japanese stocks experienced their largest daily loss on Monday due to fears of a US economic slowdown. The Nikkei 225 index plummeted by 4,451 points, marking its worst drop in history and pushing the index into bear market territory with a 25% decline since early July.

Trading in Japan and South Korea was temporarily halted as circuit breakers were triggered multiple times to curb panic selling. The volatility spread to other Asian and European markets, with US stock futures falling sharply overnight.