Everything you wanted to know about the market meltdown but were too afraid to ask

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Hello! Are you fed up with Airbnb and back to booking hotels? The short-term rental giant is considering offering luxury services for guests as a way to win back travelers, according to an exec.

In today's big story, we're giving a full breakdown of what has been a wild few days for the market.

What's on deck:

• Markets: One of the biggest names on Wall Street is not a fan of marijuana.
• Tech: Big Tech is going through a bit of a mid-life crisis.
• Business: The so-called millennial lifestyle subsidy has dried up, so we're all picking up our takeout orders now.

But first, what just happened?

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The big story

Market bloodbath

Wake me up when September August ends.

We're only six days into the month, but investors are probably already sick of August after another brutal trading day.

Confused by what's going on? Let's break it down.

What is going on in the markets? For the third day in a row, US stocks got hammered. The S&P 500 dropped 3% Monday and is down more than 8% from its all-time high in mid-July. The tech-heavy Nasdaq finished Monday down 3.43% and has dropped more than 13% from its record high.

That stinks. What caused the drop? There are a few factors at play here:

• Big Tech, the backbone of the market, had weaker-than-expected earnings last week.
• The Federal Reserve held interest rates firm on Wednesday, diverging from other central banks. (More on that in a bit.)
• Data published Thursday and Friday showed weak manufacturing numbers, light hiring, and an unexpected rise in the unemployment rate.

I heard something about Japan, too? Yes, unlike the rest of the world, Japan has kept its rates extremely low as it battles deflation. That makes it a prime target for a type of arbitrage trade, where firms borrow money in yen and then invest in currencies yielding higher interest rates. But last week Japan's central bank raised rates, which sent its currency higher and tanked its largely export-facing stock market in the process.

And I heard Warren Buffett's name floated? Berkshire Hathaway, his conglomerate, has sold about half its stake in Apple over the last quarter. His company is now sitting on $277 billion in cash, which has some people nervous that the Oracle of Omaha is out on stocks. (But that's a flawed theory.)

So how is the market reacting? Plenty of investors are repositioning their portfolios for a recession. Defensive stock sectors like consumer staples and utilities, which do well when times get tough, are on the rise. Investors are also piling into dividend-paying stocks and government bonds.

Hedge funds are a mixed bag, with some winners (investors who thrive in choppy markets) and losers (Asia-focused firms and currency traders).

Meanwhile, some mom-and-pop investors got boxed out of the action when top brokerages faced outages Monday morning. (It was probably a blessing; the worst thing you can do is panic sell.)

It's times like these I'm glad I invested in bitcoin. Ummmmm.

Ok, I'm officially mad. Who can I blame? Before you grab your pitchfork, a selloff was somewhat expected. The market has felt overvalued for a while, so it's natural investors might look to take some money off the table. But I'm guessing you don't want to hear that.

Stares menacingly If you're desperate to place the blame somewhere, you might start with the Fed. Lots of economists feel the central bank dropped the ball by not cutting rates last week.

Can they fix this? The next rate-cut meeting isn't until September. However, there has been chatter about an emergency rate cut as soon as next week. But that usually only happens during extreme emergencies.

This was kind of a bummer. Any good news? As bad as things have been, the US isn't in a recession. Former Fed official Claudia Sahm, who created a widely followed recession indicator, is optimistic about the economy's future.

3 things in markets

1. Jensen Huang sold millions in Nvidia shares right before the market tanked. The Nvidia CEO shed $323 million of his shares in the chip company ahead of a brutal global sell-off. His decisions, albeit pre-planned, were well-timed: Nvidia's stock dropped about 20% over the last month, as investors begin to doubt companies' generous spending on AI.
2. Citadel's Ken Griffin wants you to stay off the weed. The billionaire pledged $12 million to try to stop an amendment that would legalize recreational weed in Florida. The passing of the Florida bill would lead to "skyrocketing crime, suffering among children," and "a decline in the quality of life in Florida's vibrant neighborhoods," Griffin wrote in an op-ed.
3. Fewer people are moving, and it's not just because of mortgage rates. There was a 4% drop in moves for the second quarter of 2024 compared to the previous year, according to Bank of America. Big deterrents for would-be movers, in addition to high rates, were insurance and property taxes.

3 things in tech

1. Big Tech's cool-dad period is over. The industry is in the midst of a mid-life crisis. Tech giants are turning to flashy trinkets instead of products people actually want (and need). From Google to Amazon, the world's biggest tech companies are trying too hard to be cool and entering their divorced-dad era.
2. Thinking about a career in AI? Think again. Chasing AI jobs may not be the best idea, according to the chief AI architect at NYU's business school. That's because the tech sector periodically implodes, swallowing job opportunities — and Big Tech's recent earnings signal the AI hype may be about to burst.
3. Nvidia is fumbling one of its big promises. In May, CEO Jensen Huang said Nvidia would release a new product each year. But news that the company's next chip launch is delayed has some questioning whether Nvidia can deliver on that promise.

3 things in business

1. The death of the millennial lifestyle subsidy. Once upon a time, budding apps like Uber and Airbnb offered luxe conveniences at low prices to build customer loyalty. But now that these apps have made it big, those low prices have shot up. That's left a generation accustomed to low-cost luxury resorting to old-fashioned alternatives to save money.
2. Google takes a huge trust-busting hit. A federal judge in DC ruled that Google violated antitrust laws by paying billions to keep its search engine the default on US web browsers — an effective monopoly on search. The decision could seriously hurt Google's revenue and may signal more antitrust enforcement to come for other Big Tech companies.
3. Amazon is raising its hiring bar for some tech jobs. The e-commerce giant is reinstating part of its interview process for entry-level software engineers, who'll have to answer questions about Amazon's leadership principles. It's intended to boost the quality of new hires, but it also reflects a change in strategy to be more cost-conscious as its growth slows.

In other news

• Google, Netflix, and OpenAI execs are hosting a fundraiser for Kamala Harris.
• Even Nvidia can't escape the government's crackdown on Big Tech.
• A future-of-work expert explains why some companies are willing to risk losing talent to get workers back to the office.
• Assigned desks are now a work perk — and Gen Zers are making themselves right at home.
• The New York Times and other top news sites block OpenAI's new SearchGPT web crawling bot.

What's happening today

• Fortune 500 ranking of world's largest corporations released.
• First batch of Chinese G60 Starlink satellites reportedly launches today. The endeavor is in direct competition with the US's Elon Musk-backed Starlink.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. Annie Smith, associate producer, in London. Amanda Yen, fellow, in New York.