As goes the U.S., so goes the rest of the world — if the last 24 hours of trading are any indication. The Dow Jones Industrial Average and S & P 500 sold off more than 1% on Thursday, as worries over the state of the U.S. economy dented investor sentiment. The tech-heavy Nasdaq Composite wasn’t spared either, shedding 2.3% on the day. Thursday’s sell-off spilled over to international markets in a big way. .N225 5D mountain Nikkei sells off The Nikkei 225 , Japan’s stock market benchmark, plunged 5.8% — marking its biggest one-day loss since March 2020. Other markets in Asia didn’t fare much better. Hong Kong’s Hang Seng index dropped 2%, Taiwan’s Taiex lost 4.4% and the Korean Kospi benchmark shed 3.7%. In Europe, the Stoxx 600 has pulled back 1.8%, while the German Dax and France’s CAC 40 fell 1.7% and 0.8%, respectively. The common thread behind these declines seems to be concern that a U.S. economic slowdown would hurt global growth. On Thursday, investors pared through new data showing a big jump in initial unemployment claims and a contraction in U.S. manufacturing activity. Those worries were compounded after the bell Thursday by lackluster quarterly reports from companies such as Amazon and Intel. Friday’s data fueled these worries as well. The U.S. economy added just 114,000 jobs in July . That’s far below a Dow Jones consensus estimate of 185,000. That’s sent Dow futures Friday morning down more than 400 points. “The same macro worries from Thurs are still present [Friday], as investors grow increasingly concerned about weakening US growth and wonder whether the Federal Reserve is falling further behind the curve,” wrote Adam Crisafulli of Vital Knowledge. Earlier this week, Fed Chair Jerome Powell hinted that the central bank could begin cutting rates in September. “Technical factors are coming into play too as the portfolio pain inflicted by the violent Thurs slump spurs broader de-risking, creating a negative feedback loop whereby lower prices spurs follow-on selling,” he added. Elsewhere on Wall Street this morning, Wells Fargo downgraded Morgan Stanley to underweight from equal weight, citing worries around the stock’s valuation. “MS has the highest forward P/E of any large cap bank despite slowing wealth flows, downward pressure on [net interest income] and fee realization, negative flows in investment management, and accelerating insider sales,” analyst Mike Mayo said . “Further, MS doesn’t seem to benefit as much from a capital markets recovery as GS, but trades at a significant valuation premium.”
