Wall Street headed sharply lower again after Japan's Nikkei index tumbles to worst loss since 1987
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00:00A black day for the Nikkei. Japan's benchmark stock index fell by a record 4,451 points
00:07to mark a more than 12 percent loss on Monday, the KOSPI in Seoul down nearly 9 percent.
00:14Those precipitous drops came as interest rate hikes from the Bank of Japan continued to
00:18strengthen the yen against the dollar. Good news for Japanese consumers, but bad news
00:23for the country's exporters, like automakers. The Nikkei is now officially in a bear market,
00:29down more than 20 percent from its most recent peak.
00:32I think there is some panic selling happening here. Up to now, short-term investors have
00:39been piling into Japanese stocks, and we're seeing those positions being unwound all at
00:44once.
00:46The sell-off spreading worldwide, European shares near six-month lows as indexes followed
00:51Asia down, though much less sharply. Investors are chiefly worried that the world's top economy,
00:57the U.S., is headed for a major slowdown, if not a full-blown recession. A boom in
01:03A.I. stocks has begun to deflate amid a raft of disappointing earnings reports from tech
01:08firms.
01:09Meanwhile, Friday's U.S. jobs report, with 114,000 new payrolls for the month of July,
01:14came in far lower than expected, the hiring slowdown bringing unemployment to its highest
01:19level in three years.
01:22The Federal Reserve has raised America's benchmark interest rates to their highest levels in
01:26more than two decades, part of a largely successful bid to bring down inflation that peaked at
01:319.1 percent in mid-2022. Investors, though, now worried that the Fed has held rates too
01:37high for too long. Many are expecting the bank to begin cutting rates aggressively to
01:43try and hold on to the U.S. economy's soft landing.