Buffett makes another large stock sell-off!

Last Friday, U.S. stocks saw significant declines. The Dow Jones fell 1.01%, the S&P 500 dropped 1.73%, and the Nasdaq slid 2.55%. Amazon led losses with a 3.65% drop, while American Express fell 3.08%, making it the worst performer on the Dow. Tesla tumbled 8.45%, and Nvidia lost 4.09%. Most Chinese stocks also dropped, with Legend Biotech plunging 10.66% and Zeekr down 9.78%.

Japanese stocks plunge

Japanese stocks experienced their steepest decline since entering a bear market a month ago, driven by renewed concerns about a U.S. recession following a disappointing U.S. manufacturing report. Additionally, a global tech selloff and a stronger yen further dampened market sentiment.

The blue-chip Nikkei 225 Index fell by as much as 4.7% before closing down 4.2%, marking its largest drop since the 12% plunge on August 5. The decline was led by semiconductor stocks, such as Disco Corp., following Nvidia Corp.'s extended losses in after-hours trading due to news of a subpoena from the U.S. Justice Department. The broader Topix Index also dropped by 3.7%.

Panic Index Surges

In the latest developments, global panic surged due to three key factors: U.S. non-farm payroll data did not support a significant rate cut by the Federal Reserve in September, the Fed remained silent on the scale of any potential cut, and the Bank of Japan hinted at a possible rate hike. Adding to market unease, Warren Buffett resumed large-scale stock sell-offs.

1. Non-farm payroll data
The U.S. released its August non-farm payroll data, which showed an increase of 142,000 jobs, below the forecast of 165,000 and the previous month's gain of 114,000. While this job growth is in line with recent months, it falls short of the 12-month average of 202,000 jobs per month.
John Williams, the Federal Reserve's third-ranking official, stated that it is now appropriate to lower the federal funds rate and expressed increased confidence in inflation gradually approaching the 2% target. He added that policy can shift toward a more neutral stance. However, Williams did not comment on the size of a potential initial rate cut and noted that the labor market is unlikely to trigger inflationary pressures.

2. The Fed’s monetary policy
Since the start of September, the Chicago Board Options Exchange Volatility Index (VIX) has soared, rising about 49% last week. As the Fed’s interest rate decision draws near, it remains unclear if market volatility has fully played out. Investors are looking for clearer signals from the Fed’s monetary policy and economic outlook to regain confidence.

Buffett Continues Stock Sell-Off

In September, Warren Buffett’s selling spree of Bank of America stock continued. Berkshire Hathaway reduced its holdings by 18.746 million shares over three consecutive trading days—September 3, 4, and 5—cashing in approximately $760 million. Since July 17, Berkshire has sold Bank of America shares totaling around $6.97 billion.

Based on Buffett’s past behavior, when he starts selling a stock, it often leads to a full exit. In recent years, Berkshire has fully divested its stakes in several banks, including U.S. Bancorp, Wells Fargo, and Bank of New York Mellon. Market analysts, including Doug Kass from TheStreetPro, expressed concern over Buffett’s strategy, particularly the reduction of positions in what were considered “forever holdings” like Apple and Bank of America.

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