Payam Javan: U.S. stocks plunged sharply on Monday morning as fears of a potential recession intensified globally. The Dow Jones Industrial Average fell by 1,072 points, or 2.7 percent, following a 611-point drop earlier in August. The S&P 500 and Nasdaq Composite also experienced significant declines, with the S&P 500 down 4.1 percent and the Nasdaq dropping 6.3 percent. This market turmoil comes amid concerns about economic slowdown, exacerbated by a weak jobs report and diminishing manufacturing activity.

In international markets, Japan’s Nikkei 225 index plummeted by 12 percent, marking its worst decline ever, while the Topix index fell 12.2 percent. U.S. government bond yields reached multi-month lows, with the 10-year note at 3.68 percent and the two-year at 3.69 percent. Analysts from Goldman Sachs and JPMorgan have revised their recession probabilities, with estimates ranging from 25 to 50 percent. Wall Street brokerages are also adjusting their Federal Reserve rate projections, with discussions about potential rate cuts to address economic weaknesses.

Federal Reserve officials, including Chicago Fed President Austan Goosbee, have indicated that the central bank is prepared to respond to economic signs of distress. Goosbee assured that the Fed would act to stabilize the economy and maintain financial stability, although he downplayed the likelihood of a recession based on recent job data. The market instability could impact the 2024 presidential election, with former President Donald Trump criticizing the current administration’s handling of the economy and suggesting that it is responsible for the recent downturn.