Joey Solitro
It was an ugly start to the week for stocks, with the main indexes notching sharp losses Monday. Today's broad weakness continued last week's selloff and was sparked by a confluence of factors, including concerns the Fed has waited too long to cut rates and the collapse of the carry trade in Japan.
The selling in global markets started late last week after disappointing manufacturing data and a softer-than-expected July jobs report caused concern that the Fed is behind the ball on rate cuts and that a recession could be looming.
Wall Street's jitters were only exacerbated by an unwinding of the carry trade in the Japanese yen. "[O]ver many years, investors have been borrowing in yen to invest in higher-yielding assets," writes the Schwab Center for Financial Research team in emailed commentary. "With interest rates rising [and] the yen moving higher, those trades are no longer profitable, and traders are unwinding them. The unwinding of leveraged trades in risk assets is taking on a life of its own because the size of the trades is large."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
As a result, the Dow Jones Industrial Average plummeted 2.6% to 38,703, the S&P 500 slumped 3.0% to 5,186, and the Nasdaq Composite surrendered 3.4% to 16,200.
Buffett slashes Apple stake
Not helping matters was Berkshire Hathaway's (BRK.B, -3.4%) release of its quarterly filing with the Securities and Exchange Commission (SEC), which showed Warren Buffett's holding company slashed its stake in Apple (AAPL) in the second quarter.
Indeed, the report indicated the market size of Berkshire's Apple stake was valued at $84.2 billion as of June 30. By contrast, Buffett's position in AAPL had a market value of $135.4 billion at the end of Q1.
Buffett & Co. already began trimming Berkshire's Apple stake in Q1. "Why? Because corporate taxes are 'likely' to go up 'later,'" wrote Dan Burrows, senior investing editor at Kiplinger.com, at the time. "He figures the federal government – at some unknown future date – will have to raise taxes to reduce the deficit."
Apple stock finished Monday's session down 4.8%.
Coinbase sells off alongside crypto
Coinbase Global (COIN) was another notable decliner Monday, plunging 7.3% as major cryptocurrencies, including bitcoin and ethereum, declined sharply.
Still, Wall Street remains upbeat toward the stock that has more than doubled on a year-over-year basis. Speaking for the bulls is Oppenheimer analyst Owen Lau (Buy). "We view COIN as an enabler of crypto innovation, which solves some pain points in the existing financial system," Lau wrote in a recent note.
Kellanova, CrowdStrike climb in down day
Not all of the day's price action was lower. Kellanova (K), for instance, climbed 16.2% on news the Pringles maker could be bought by privately owned snack maker Mars. According to The Wall Street Journal, a deal between the two consumer staples firms is reportedly in the works and could value Kellanova at roughly $30 billion.
"We believe a transaction would further validate the power of Kellanova's brands and growth potential, both in North America and internationally," wrote Stifel analyst Matthew Smith. "The transaction would be the largest packaged foods transaction since the Kraft-Heinz merger."
Elsewhere, CrowdStrike (CRWD) stock rose 1.9% after the latest development in the cybersecurity firm's back and forth with air carrier Delta Air Lines (DAL, -4.8). The two have been at odds since a mid-July technical glitch sparked by a CrowdStrike software update disrupted several industries and services. Delta, specifically, had to cancel thousands of flights and is seeking damages from CrowdStrike.
However, a lawyer for the cybersecurity firm released a letter over the weekend that indicated Delta had rejected onsite help during its recent outage and that CrowdStrike's liability is capped in the single-digit millions.
"For a large customer such as Delta, if CRWD's liability risk is in the single-digit millions, the overall risk would be a lot less than feared," says Wedbush analyst Taz Koujalgi.
Related content
- The Fed Is About to Cut Rates. What Should Investors Do?
- Earnings Calendar and Analysis for This Week
- Kiplinger's Economic Calendar for This Week
-
RMD Deadline April 1: Five Tax Strategies to Manage Your 2025 IncomeTaxable Income The April 1, 2025, deadline for required minimum distributions (RMDs) is fast approaching for retirees who turned 73 in 2024.
-
Rising AI Demand Stokes Undersea InvestmentsThe Kiplinger Letter As demand soars for AI, there’s a need to transport huge amounts of data across oceans. Tech giants have big plans for new submarine cables, including the longest ever.
-
How Much Does Being Rich Matter in Retirement?After a certain point, having more money in retirement won't make you any happier, new research shows. Instead, physical health, a sense of purpose, and a minimal amount of non-mortgage debt are more relevant.
-
The Three Biggest Fears Keeping Retirees Up at NightHere are the steps you can take to put those fears to rest and retire with confidence so you can relax and enjoy the life you've planned.
-
What Can a Donor-Advised Fund Do for You? (A Lot)DAFs and private foundations go about helping charities (and those who donate) in different ways. Each comes with its own benefits and restrictions to navigate.
-
Estate Planning When You Have International AssetsEstate planning gets tricky when you have assets and/or beneficiaries outside the U.S. To avoid costly inheritance mistakes, it pays to understand the basics.
-
Microsoft Stock: Innovation Spurs Its 100,000% ReturnMicrosoft's ability to recognize the "next big thing" has allowed sales – and its share price – to grow exponentially over the years.
-
Three Essential Estate Planning Steps to Protect Your Nest EggAfter dedicating years to building your wealth and securing your future, make sure your assets are protected and your loved ones are provided for in the future.
-
Is Chasing the American Dream Ruining Your Financial Life?Too many people focus on visible affluence as a marker of success. Here's how to avoid succumbing to the pressure and driving yourself into debt.
-
Stock Market Today: Dow Sinks 715 Points as Inflation Unrest GrowsInflation worries are showing up in both hard and soft data.
