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U.S. equity futures extended their September slump Wednesday, while market volatility gauges surged higher, as a pullback in risk sentiment, and a big rotation out of tech stocks, continues to hammer global markets.
Stocks suffered their biggest decline since the early August meltdown Tuesday, and their second-largest decline of the year, as tech stocks slump amid a $280 billion decline for AI chipmaker Nvidia (NVDA) and a reversal of August’s risk sentiment.
A weaker-than-expected reading for U.S. manufacturing activity added to the broader market caution, as did a sustained rally in the bond market, which pushed 10-year U.S. Treasury yields to 3.823% in overnight trading, some 10 basis points lower than their end-August close.
The CBOE Group’s VIX index, the market’s benchmark volatility gauge , surged more than 40% over the session, and gained another 36% in after hours trading, as investors rushed to purchase downside protection for their portfolios.
Nvidia shares lost nearly $280 billion in value during yesterday’s tech selloff, the biggest single-day decline in market cap on record.
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The VIX was last marked at $22.65, a level that suggests traders are expecting daily swings of around 1.41%, or 78 points, for the S&P 500 over the next month.
Investors are now braced for a series of labor market data releases over the next three days, starting with the July Jolts report of job openings and quits rates at 10:00 am Eastern time.
Payroll processing group ADP will publish its private employment report for the month of August Thursday while the Labor Department will release its crucial August non-farm payroll report the following day.
Related: Fed rate cuts may not guarantee a September stock market rally
On Wall Street, futures tied to the S&P 500, which fell nearly 120 points during yesterday’s session, are priced for an 18 point opening bell decline.
Futures tied to the Dow Jones Industrial Average, meanwhile, are called 96 points lower while the Nasdaq is looking at a 100 point pullback.
More Wall Street Analysts:
Analysts reboot Grand Theft Auto maker’s stock price targetAmerican Express stock analyst flags concerning shift in consumer behaviorAnalyst resets Nvidia stock price target before earnings
In overseas markets, European stocks were notably lower following last night’s selloff on Wall Street, with the Stoxx 600 down 0.86% in Frankfurt and the FTSE 100 down 0.6% in London.
Overnight in Asia, the Nikkei 225 slumped 4.24% in Tokyo as markets effectively tracked last night’s final hour on Wall Street, while the regional MSCI ex-Japan benchmark fell 1.85% into the close of trading.
Related: Veteran fund manager sees world of pain coming for stocks
