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Apple ( AAPL ) falls as Berkshire cuts its stake by half

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Wall Street "fear gauge" spikes

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U.S. does not look like it is in recession: Fed's Goolsbee

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Indexes: Dow down 2.6%, S&P 500 down 3%, Nasdaq down 3.4%

(Adds details after market close)

By Caroline Valetkevitch

NEW YORK, Aug 5 (Reuters) - U.S. stocks ended with steep

losses on Monday, leaving the Nasdaq and S&P 500 down at least

3% each as the market extended last week's sell-off amid U.S.

recession worries and as Apple ( AAPL ) shares fell sharply on news that

a big investor had cut its stake.

All three major indexes registered their biggest three-day

percentage declines since June 2022, and the Nasdaq and S&P 500

closed at their lowest levels since early May.

The recession fears shook global markets and drove investors

out of risky assets following weak economic data last week,

including Friday's soft U.S. payrolls report.

Investors worry that the economy is losing steam more

rapidly than anticipated and that the Federal Reserve erred by

keeping interest rates steady at its last policy meeting.

Shares of Apple ( AAPL ) fell 4.8% after Berkshire Hathaway ( BRK/A )

halved its stake in the iPhone maker. Billionaire

investor Warren Buffett also let cash at Berkshire soar to $277

billion.

Nvidia ( NVDA ), Microsoft ( MSFT ) and Alphabet

also slid, while the Cboe Volatility index, Wall Street's

"fear gauge," had its highest close since Oct. 28, 2020. All 11

of the S&P 500 sectors fell, led by declines in technology

.

Chicago Fed President Austan Goolsbee downplayed recession

fears, but said Fed officials need to be cognizant of changes in

the environment to avoid being too restrictive with interest

rates.

"Today we're seeing a sell-off as an extension of that

anxiety that was felt last week," said Neville Javeri, portfolio

manager and head of the Empiric LT Equity team at Allspring in

Washington.

It "started off with the jobs data last week, and it clearly

led to the belief that the Fed needs to start being more

proactive around where those unemployment numbers are going," he

said.

The Dow Jones Industrial Average fell 1,033.99

points, or 2.6%, to 38,703.27, the S&P 500 lost 160.23

points, or 3.00%, to 5,186.33 and the Nasdaq Composite

dropped 576.08 points, or 3.43%, to 16,200.08.

The S&P 500 was down more than 4% at its lowest level of the

session, 5,119.26.

Indexes trimmed losses in late morning after data showed

U.S. services sector activity in July rebounded from a four-year

low amid a rise in orders and employment.

The weak jobs report and shrinking manufacturing activity in

the world's largest economy added to worries following recent

disappointing forecasts from the big U.S. technology companies.

The Nasdaq Composite on Friday confirmed it was in correction

territory.

Traders are now pricing in an 86% chance the Fed will cut

rates by 50 basis points at its next scheduled policy meeting in

September, and a 14% chance of a 25 basis-point reduction,

according to the CME Group's FedWatch Tool.

The focus of the sell-off has been the so-called Magnificent

Seven group of stocks, which previously had propelled the

indexes to record highs this year.

Traders also attributed some weakness in stocks to unwinding

of sharp positions of carry trades, where investors borrow money

from economies with low interest rates such as Japan or

Switzerland to fund their bets in high-yielding assets

elsewhere.

Pringles maker Kellanova ( K ) soared 16.2% after a Reuters

report said candy giant Mars was exploring a potential buyout of

the company.

Volume on U.S. exchanges was 16.50 billion shares, compared

with the 12.29 billion average for the full session over the

last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a

9.04-to-1 ratio; on Nasdaq, a 6.44-to-1 ratio favored decliners.

The S&P 500 posted 16 new 52-week highs and 26 new lows; the

Nasdaq Composite recorded 14 new highs and 508 new lows.