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Apple ( AAPL ) falls as Berkshire halves stake

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Wall Street "fear gauge" spikes, last at 40.63

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U.S. doesn't look like it's in recession: Fed's Goolsbee

tells

CNBC

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Indexes slide : Dow 2.2%, S&P 2.5%, Nasdaq 3.1%

(Updated at 10:04 a.m. ET/ 1404 GMT)

By Shubham Batra and Shashwat Chauhan

Aug 5 (Reuters) -

Wall Street's main indexes slumped 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 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 trillion in

market value.

Apple ( AAPL ) fell 4.6% 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 ) slid 5.6% after reports of a delay in the

launch of its upcoming artificial-intelligence chips due to

design flaws. Microsoft ( MSFT ) and Alphabet fell

about 3% each.

At 10:04 a.m. the Dow Jones Industrial Average fell

860.39 points, or 2.18%, to 38,870.14, the S&P 500 lost

133.97 points, or 2.51%, to 5,212.59 and the Nasdaq Composite

lost 520.61 points, or 3.10%, to 16,255.55.

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 an 88% 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.

"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.

Chicago Fed President Austan Goolsbee downplayed recession

fears but said that Fed officials need to be cognizant of

changes in the environment to avoid being too restrictive with

interest rates.

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 40.63.

U.S. Treasury yields tumbled to their lowest in a year

and a closely watched gap between two- and 10-year Treasury

notes

turned positive

for the first time since July 2022, usually indicating U.S.

economy is heading into a downturn.

Offering some respite, data showed

U.S. services sector

activity rebounded from a four-year low in July amid a rise

in orders and employment.

All 11 major S&P 500 sectors were trading lower, with

information technology and consumer discretionary

the worst hit.

Declining issues outnumbered advancers by a 13.06-to-1 ratio

on the NYSE and by a 11.8-to-1 ratio on the Nasdaq.

The S&P 500 posted 13 new 52-week highs and 23 new lows

while the Nasdaq Composite recorded 6 new highs and 438 new

lows.

Pringles maker Kellanova ( K ) soared 14.8% after a Reuters

report said candy giant Mars was exploring a potential buyout of

the company.