Nvidia Stock Plunge and US Economic Data Trigger Global Market Decline

Global stock markets experienced a significant downturn following disappointing economic indicators that have raised worries about the stability of growth in the United States.

On Tuesday, the S&P 500 index in Wall Street recorded its most significant drop in a month, leading to a sell-off that extended into Asian markets during overnight trading and impacted European exchanges on Wednesday morning.

Investors reacted nervously to reports indicating that the US manufacturing sector faced a contraction that was more severe than anticipated.

The decline in stock values was further exacerbated by a nearly 10 percent decrease in Nvidia’s shares, the prominent AI chip manufacturer listed on Nasdaq. This drop followed news that Nvidia had been subpoenaed by the US Justice Department amid an investigation into its market dominance in AI chips. According to Deutsche Bank, Nvidia’s market value decreased by $279 billion, marking a historic single-stock monetary loss.

Upcoming US employment figures, set to be released later this week, may heighten concerns regarding the largest economy in the world. A negative jobs report could fuel speculation that the US Federal Reserve might implement a more substantial interest rate reduction of 50 basis points during its forthcoming meeting on September 18. Investors have escalated their expectations for a significant rate cut, assessing the chances at about one in three.

The S&P 500 index fell by 2.12 percent on Tuesday, the largest drop since August 5. The tech-dominated Nasdaq plummeted by 3.26 percent, while the Dow Jones Industrial Average decreased by 1.51 percent.

Analysts at Deutsche Bank noted, “As September began following the Labor Day holiday, the month quickly began to fulfill its reputation as the worst month of the year for risk, particularly evident in the recent market sell-off.”

Oil prices also took a hit, dropping approximately 5 percent on Tuesday. This decline followed indications that a resolution had been reached to restore Libya’s crude production and exports. On Wednesday morning, Brent crude oil further decreased by 1.21 percent, settling at $72.89 per barrel.

Shares in oil majors Shell and BP fell, contributing to a 0.78 percent drop in the FTSE 100, which lost 64.46 points to close at 8,234.01. The Scottish Mortgage Investment Trust, focused on major US tech investments, declined by 2.4 percent. European markets opened weakly as well, with the pan-European Stoxx 600 index down by 1.06 percent, or 5.53 points, to 514.32.

In Asia, Japan’s Nikkei 225 index experienced a decline of 4.24 percent, while Hong Kong’s Hang Seng index dropped by 1.10 percent. Additionally, South Korea’s Kospi index, which is heavily influenced by semiconductor production, decreased by 3.15 percent.

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