The U.S. Bureau of Labor Statistics today reported 111,000 fewer jobs added in July, compared to the average monthly level over the last year of 215,000. The official unemployment rate, with its limited usefulness, rose to its highest level in three years, when Covid was at its peak. Market commentators are citing the Federal Reserve’s unwillingness to cutting interest rates as prompting fears of a “hard landing” Now, expected rate cuts are sending instabilities through the investment world, and the bubble in AI-related stocks is immediately threatened.
Yesterday, the Dow fell over 600 points, the S&P 500 dropped 1.5% and the Nasdaq Composite suffered a 2.5% hit. Then Japan’s Nikkei 225 opened today with a stunning 5.8% collapse, its biggest one-day collapse in years. The Dow followed today with another 800-point loss (2.3%), the S&P down 2.6% and the Nasdfaq again leading the way, down 3.1%. While it’s been an ugly two days, such movements simply pale in consideration of the contagion of a possible triggering of the massively leveraged derivatives market.
