September "Black Start" for US Stocks: Nvidia Loses $280B in Market Value

**All three major indices record their largest single-day drop since early August

**Nvidia's market value evaporates by $279 billion

**U.S. August ISM Manufacturing Index falls short of expectations

On September 3rd (Tuesday), local time, poor data once again sparked concerns about economic slowdown, and U.S. stocks fell across the board on the first trading day of September, with technology stocks taking a collective beating.

By the close of the day, the Dow Jones Industrial Average had fallen by 626.15 points from the previous trading day, closing at 40,936.93 points, a drop of 1.51%; the S&P 500 Stock Index fell by 119.47 points, closing at 5,528.93 points, a drop of 2.12%; the Nasdaq Composite Index fell by 577.33 points, closing at 17,136.30 points, a drop of 3.26%.

Advertisement

The S&P 500 Index, the Nasdaq Index, and the Dow Jones Industrial Index all recorded their largest single-day drop since early August.

The VIX Volatility Index surged by 33.2%, reaching 20.72, marking the largest single-day increase and the highest closing level since early August.

Semiconductor stocks performed weakly, with Nvidia down by 9.53%, and its market value evaporating by over $278.9 billion overnight (approximately 1986.2 billion yuan). Intel fell by 8.8%, GlobalFoundries by 8.57%, Micron Technology by 7.96%, Advanced Micro Devices (AMD) by 7.82%, Qualcomm by 6.88%, TSMC by 6.57%, ASML by 6.47%, and Broadcom by 6.14%.

U.S. stock markets were closed on Monday due to the Labor Day holiday.

Data released by the Institute for Supply Management (ISM) on Tuesday showed that the U.S. August ISM Manufacturing PMI was 47.2, lower than the expected 47.5, but higher than the previous value. The U.S. August ISM Manufacturing New Orders Index fell to 44.6, significantly lower than the previous value (47.4), marking the lowest level since May 2023.Analysts have indicated that the ISM manufacturing index has intensified market concerns over a potential recession in the U.S. economy, thereby increasing the selling pressure on U.S. stocks. Moreover, as September begins, investors will be compelled to contend with seasonal headwinds, given that the past decade has shown September to be the worst-performing month for the stock market.

Additional data released earlier revealed that the U.S. August S&P Global Manufacturing PMI final value was 47.9, below the expected 48.1, with the previous value at 48. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated that the further decline in PMI data suggests an increased drag on the economy from the manufacturing sector in the mid-third quarter. Forward-looking indicators suggest that this drag may intensify in the coming months.

At the beginning of August, U.S. stocks also experienced significant selling, with concerns over a U.S. economic recession and the unwinding of yen carry trades by hedge funds being considered the main causes of the stock market decline. Henry Allen, a macro strategist at Deutsche Bank, remarked, "The start of August for U.S. stocks was incredibly challenging, but after August 5th, the market began to regain calmness. To some extent, this is attributed to more positive economic data, which helped investors alleviate concerns about an imminent economic recession."

Market participants believe that it will be difficult for the stock market to find momentum before the release of August non-farm employment data on Friday. The non-farm employment data will be crucial for the Federal Reserve's decision on the extent of rate cuts in September. The market widely anticipates that the U.S. will see an increase of 160,000 non-farm jobs in August, with the unemployment rate expected to drop to 4.2%.

Raisah Rasid, Global Market Strategist at J.P. Morgan Asset Management, said, "The key lies in Friday's non-farm employment numbers. Policymakers are looking for signs of a cooling labor market to pave the way for rate cuts."

The non-farm employment data for July showed that the unemployment rate rose to a near three-year high of 4.3%, with a significant slowdown in hiring. These figures have increased investors' expectations for the extent of rate cuts by the Federal Reserve this year. The overnight index swaps (OIS) tied to the Federal Reserve's meeting schedule indicate that traders currently expect the Federal Reserve to cumulatively cut rates by approximately 100 basis points over three meetings this year, implying that one of the meetings may feature a substantial rate cut of 50 basis points.

Mohit Kumar, Chief Economist for Europe at Jefferies International, stated, "We expect increased volatility in the coming weeks. Currently, central banks are data-dependent, and market expectations for their reactions may fluctuate dramatically around data releases."

Former U.S. Treasury Secretary Lawrence Summers stated that the Federal Reserve's monetary policy is not as tight as investors might think, making the market more susceptible to entering bubble territory. Summers also mentioned that the U.S. economy remains robust, with good employment conditions and resilient economic growth.

In the commodity market, international oil prices fell by more than 4% on Tuesday, erasing gains for the year and reaching the lowest level since December 12, 2023. There are indications that a dispute over the suspension of Libyan oil production and exports may be resolved.

As of the close of the day, the price of light crude oil futures for delivery in October at the New York Mercantile Exchange fell by $3.21, closing at $70.34 per barrel, a decrease of 4.36%.A statement signed by representatives of Libya's legislative body on Tuesday stated that the institutions have agreed to appoint a new central bank governor within 30 days after United Nations-sponsored talks. Market sources reported that oil exports from Libya's main ports were suspended on Monday, with oil production across the country being reduced, as the standoff between opposing political factions over control of the central bank and oil revenues continues. Saxo Bank analyst Ole Hansen said that speculation about the transactions triggered a selling momentum.