(NEXSTAR) – Investors at big-name firms Charles Schwab and Fidelity Investments found themselves unable to sell on Monday morning as global financial markets tumbled.
Shortly after 7 a.m., Schwab apologized for a “technical issue” that prevented customers from accessing their accounts. At 9:38 a.m. the company announced that the problem had been fixed, but did not reveal what might have caused it.
Nexstar reached out to Schwab for more information but did not immediately receive a response.
Thousands of Fidelity clients also reported problems starting shortly after the market opened and lasting for about an hour, according to the Down Detector site.
Several other trading platforms, including Robinhood and Vanguard, also fell during the stock market, Reuters reported.
Some retail investors, many of whom were hoping to “buy the dip” or dump the perishable shares, were outraged on social media after they were unable to make a trade.
The news of the cuts came amid a tumultuous Monday that began with an overseas collapse reminiscent of the 1987 global financial crisis and ravaged Wall Street with heavy losses, as fears is getting worse in relation to the American recession.
The S&P 500 fell 3% for its worst day in nearly two years. The Dow Jones industrial average advanced 1,033 points, or 2.6%, while the Nasdaq composite fell 3.4%.
The drops were the latest in global trade that began last week. Japan’s Nikkei 225 helped start Monday by dropping 12.4% for its worst day since the 1987 Black Monday crisis.
It was the first chance for traders in Tokyo to react to Friday’s report showing US employers slowed hiring last month by more than economists had expected. It was the latest data on the US economy that was weaker than expected, and all this has raised fears that the Federal Reserve has squeezed the US economy for too long. with higher interest rates in hopes of curbing inflation.
Professional investors warned that some technical factors could be amplifying the activity in the markets, and that the drops could be excessive, but the losses were still hitting. South Korea’s Kospi index fell 8.8%, and bitcoin fell below $54,000 from more than $61,000 on Friday.
Even gold, which has a reputation as a safe haven in times of turmoil, slipped about 1%.
It is partly because traders began to wonder if the damage has been so severe that the Federal Reserve will have to reduce interest rates in an emergency meeting, before its next decision scheduled for September 18. in line with the Fed’s expectations, it fell below 3.70% in the morning from 3.88% from Friday and from 5% in April. It later recovered and returned to 3.89%.
“The Fed can ride a white horse to save the day with a major rate cut, but the case for rate cuts appears weak,” said Brian Jacobsen, chief economist at Annex Wealth Management. “They’re usually reserved for emergencies, like COVID, and a 4.3% unemployment rate doesn’t really seem like an emergency.”
In fact, the US economy is growing, the US stock market is in good shape for the year and a recession is far from certain. The Fed was clear about the tightrope it began to walk when it began hiking rates in March 2022: Getting aggressive would suffocate the economy, but easing too much would provide more oxygen and it hurts everyone.
Goldman Sachs economist David Mericle sees a bigger chance of a recession in the next 12 months after Friday’s jobs report. But he still sees only a 25% chance of that, down from 15%, in part “because the data looks good overall” and he “doesn’t see a huge imbalance of funds.”
Another recent slowdown on Wall Street may have been a windfall from the stock market, which has soared to record highs this year, in part because of the artificial intelligence technology boom. Analysts have been saying for a while that the stock market looked expensive after prices rose faster than business profits.
“Markets tend to go up like they’re climbing a ladder, and they go down like they’re falling out of a window,” according to JJ Kinahan, CEO of IG North America. He talks a lot about the recent concerns over AI’s waning enthusiasm, about the growing pressure on companies to show how AI is becoming profitable, and “the market that was ahead of it.”
The only way for stocks to look cheap is for prices to go down or their profits to go up. Expectations remain high for the latter, with S&P 500 earnings growth this quarter looking the strongest since 2021.
Professional investors also pointed to the Bank of Japan’s move last week to raise its interest rate from near zero. Such a move would help boost the value of the Japanese yen, but it could also force traders to exit agreements where they borrowed money for free in Japan and invest it elsewhere around the world.
Stocks also pared losses on Monday after a report said growth in US service businesses was stronger than expected. Growth is led by arts, entertainment and leisure businesses, as well as lodging and food services, according to the Center for Supply Management.
However, the stocks of companies whose profits are closely related to the strength of the economy lost a lot due to the fear of falling. Small companies in the Russell 2000 index fell 3.3%, washing away what was a revival for it and other battered areas of the market.
To make matters worse for Wall Street, Big Tech stocks tumbled as the most popular stock in the market for much of this year continued to slide. Apple, Nvidia and a few other Big Tech stocks known as the “Magnificent Seven” had caused the S & P 500 to report after the record this year, although the high profit margin was reduce the size of the stock market.
But Big Tech’s performance turned upside down last month as investors worried their prices were too high and expectations for future growth were becoming more difficult to achieve. A series of low profit reports that started with updates from Tesla and Alphabet added to the pessimism and accelerated the decline.
Apple fell 4.8% Monday after Warren Buffett’s Berkshire Hathaway revealed that it has reduced its stake in the iPhone maker.
Nvidia, the chip company that has become the poster child of Wall Street’s AI bonanza, fell even more, 6.4%. Analysts cut their profit estimates over the weekend for the company after a report from The Information said Nvidia’s new AI chip was delayed. The latest sell-off lowered Nvidia’s profit for the year to about 103% from 170% in mid-June.
Another Big Tech titan, Alphabet, fell 4.4% after a US judge ruled that search engine Google illegally used its power to harm competition and stifle innovation.
Overall, the S&P 500 fell 160.23 points to 5,186.33. The Dow sank 1,033.99 to 38,703.27, and the Nasdaq composite fell 576.08 to 16,200.08.
External concerns about corporate profits, interest rates and the economy are also weighing on the market. The war between Israel and Hamas may be escalating, which may cause the price of oil to fall more than people. That adds to the growing concern about potential hotspots around the world, while the upcoming US election could make matters worse.
Wall Street has been worried about how the policies from November can affect the markets, but strong changes in the price of the price can affect the election itself.
The threat of a recession may put Vice President Kamala Harris on the defensive. But slower growth could also reduce inflation and force former President Donald Trump to shift from his current focus on higher prices to outline ways to revive the economy.
“It depends on jobs,” said Quincy Krosby, chief global strategist for LPL Financial. Jobs drive spending by US consumers, which is also a large part of the US economy.
“When we get to election day, the unemployment rate will be very important.”
The Associated Press contributed to this report.
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