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Apple ( AAPL ) falls as Berkshire halves stake

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Wall Street "fear gauge" at over four-year high

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Futures drop: Dow 3.15, S&P 500 4.60%, Nasdaq 6.23%

(Updated at 8:36 a.m. ET/1236 GMT)

By Shubham Batra and Shashwat Chauhan

Aug 5 (Reuters) - Wall Street looked set to plunge at

the open on Monday as fears of the United States tipping into

recession following weak economic data last week rippled through

global markets.

Bourses from Asia to Europe took a beating and bond yields

slipped as investors rushed to safe-haven assets and bet the

U.S. Federal Reserve would now need to cut interest rates

aggressively to spur growth.

The premarket selloff was brutal, with the so-called

Magnificent Seven group of stocks - the main driver for the

indexes hitting record highs earlier this year - set to lose a

combined $1.3 trillion in market value.

Apple ( AAPL ) fell 10% after Berkshire Hathaway ( BRK/A )

halved its stake in the iPhone maker, suggesting that

billionaire investor Warren Buffett is growing wary about the

broader U.S. economy or stock market valuations that have gotten

too high.

Nvidia ( NVDA ) slumped 14.3% after reports of a delay in

the launch of its upcoming artificial-intelligence chips due to

design flaws. Microsoft ( MSFT ) and Alphabet slid

nearly 6% each.

At 8:36 a.m. ET, Dow e-minis were down 1,257

points, or 3.15%, S&P 500 e-minis were down 247.5

points, or 4.6%, and Nasdaq 100 e-minis were down

1,155.25 points, or 6.23%.

A weak jobs report and shrinking manufacturing activity in

the world's largest economy, coupled with dismal forecasts from

the big U.S. technology firms, pushed the Nasdaq 100 and

the Nasdaq Composite into a correction last week.

The disappointing jobs data also triggered what is known as

the "Sahm Rule", seen by many as a historically accurate

recession indicator.

Traders now see a 90.5% probability that the U.S.

central bank will cut benchmark rates by 50 basis points in

September, compared with an 11% chance seen last week, according

to CME's FedWatch Tool.

Big Wall Street brokerages also revised their Fed rate

projections for 2024 to show greater policy easing by the

central bank.

"I don't think the Fed would go 50 basis points because at

the same time it would imply that the Fed was wrong, that a

recession is right around the corner and it would do more to

increase investor tension than it would to calm nerves," said

Sam Stovall, chief investment strategist at CFRA Research.

"If anything, I would say that the Fed might engage in an

intra meeting, easing of 25 basis points to let the markets know

that it is on top of the issue."

Yields on U.S. government bonds hit multi-month lows, with

the 10-year note last at 3.6839%, while the two-year

slipped to 3.6907%.

The CBOE Volatility index, also known as Wall

Street's "fear gauge", breached its long-term average level of

20 points last week and was currently at 62.64, highest since

April 2020.

Crypto-linked stocks fell after Bitcoin hit its

lowest in five months. Coinbase Global ( COIN ) was down 18.3%,

while MicroStrategy ( MSTR ) and Riot Platforms ( RIOT ) were

down 25.4% and 17.5%, respectively.

Pringles maker Kellanova ( K ) soared 22.1% after a Reuters

report said candy giant Mars was exploring a potential buyout of

the company.