Global Stock Markets Bleed $4.1 Trillion in One Week in Largest Crash in Two Years

The global stock market saw its market capitalization plunge by around $4.1 trillion last week in its largest drop in two years amid a wide market sell-off that came over mixed US jobs data and growing deflationary pressure in China.

According to the economics outlet Kobeissi Letter on the microblogging platform X (formerly known as Twitter), world stocks’ drawdown of a “massive $4.1 trillion” in a week was “twice as much as the previous largest drawdown in 2024,” with the U.S. market accounting for around 54% of that drop after the S&P 500 index dropped 4.3% and the tech-heavy Nasdaq plunged 5.8%.

The sell-off comes as the total annual interest costs on U.S. Federal debt have surpassed the $1.1 trillion mark in the second quarter of the year, with the government now paying a record $3 billion in interest per day on its debt.

The Federal Reserve started hiking interest rates in 2022 to rein in inflation, and only stopped in late 2023 when the Fed Funds interest rate reached 5.5%. While the market is expecting interest rates to be cut later this month, the country’s debt has kept on rising to now be above $35.3 trillion.

Per Kobeissi Letter, the combination of high interest rates with the country’s growing debts means that interest “has literally become one of the largest annual expenses for the US in a matter of years.”

Notably, equities have recently lost over $1 trillion in market capitalization over a single trading session as large-cap tech stocks endured a massive sell-off that saw the price of Nvidia (NVDA), a company that’s been rallying off of AI growth bets, losing over $360 billion in market capitalization including its after-hours move.

On top of Nvidia’s slowing growth, two manufacturing activity indicators have shown continued sluggish activity in the sector that has been affected by high interest rates. Later this week, the US August jobs report will be released and could lead to further volatility, as last month a hotter-than-expected unemployment reading led to a stock market drawdown.

According to Investopedia, September is the only calendar month that, over the last 98 years, has recorded negative returns in the stock market, leading to what’s known as the September Effect, which refers to the market’s underperformance during the month.

Featured image via Unsplash.