Wall Street's stock sell-off was set to intensify in a major way Monday as concerns mounted over the health of the US economy.

Dow Jones Industrial Average futures (YM=F) lost 800 points before the bell. Nasdaq 100 futures (NQ=F) were crushed by nearly 5% after the tech-heavy index entered into a correction with Friday's sharp losses. S&P 500 futures (ES=F) cascaded almost 3%.

Recession Fears & Market Volatility

The global stock market is in the midst of a rapidly intensifying sell-off after Friday's lackluster US jobs report added to concerns about the economy and on whether the Federal Reserve had waited too long to begin cutting interest rates. Of note, almost 100% of bets are on the central bank to cut rates by 0.5% by its September meeting, according to the CME FedWatch tool.

Tech Stocks Lead Sell-Off

Some of the biggest companies in the stock market were set to see their values plummet at the open. Apple (AAPL) was down more than 6% amid the sell-off, and also after news that Berkshire Hathaway (BRK-B) had cut its stake in the company in half. Nvidia's (NVDA) pull back continued, as it dropped 10%. Tesla (TSLA) plunged more than 8%.

Sahm Rule Recession Indicator

The weak jobs data also triggered what is known as the "Sahm Rule," seen by many as a historically accurate recession indicator. Named after former Federal Reserve economist Claudia Sahm, the rule has successfully predicted every recession since 1970. It stipulates that the economy is in the early stages of a recession when the three-month moving average of the jobless rate is at least a half-percentage point higher than the 12-month low. Over the past three months, the unemployment rate has averaged 4.13%, which is 0.63 percentage points higher than the 3.5% rate recorded in July 2023, crossing that threshold.

Global Market Fallout

The concerns have spread throughout the world, as well. Traders in Asia greeted the week with a similar sell-off, as Japan's Nikkei 225 (^N225) was routed by more than 12% in its biggest-ever daily loss. In commodities, meanwhile, oil was near its lows of the year, with WTI crude futures (CL=F) down to near $72 a barrel.

Fed Rate Cuts and Market Sentiment

Big Wall Street brokerages also revised their Fed rate projections for 2024 to show greater policy easing by the central bank. Rate cuts should be supportive of stocks, and continued confidence that the Fed could cut rates may cushion sentiment.

The Unwinding of Yen Carry Trade

There is also chatter about the unwind of yen "carry trade" adding fuel to the global market decline after the Bank of Japan raised interest rates last week. The yen is rising in value vs. the U.S. dollar, ending a practice of traders borrowing in the cheap currency to buy other global assets.

What's Next for Investors?

The latest jobs data look like the catalyst that has triggered a selloff that was already in the making, and which may be exacerbated by technical factors. While the gloomy economic backdrop is seeing investors rapidly price in action from the Fed, including a half-percentage-point interest-rate cut in September, investors cautioned against turning too bearish too fast. This is a pullback, a correction. We'll probably hit oversold at some point…rather quickly at these levels.