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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

(Updates to 4 p.m. ET, adds analyst comment)

By Caroline Valetkevitch

NEW YORK, Aug 5 (Reuters) - Major U.S. stock indexes

ended sharply lower on Monday as U.S. recession worries shook

global markets and drove investors out of risky assets, while

Apple ( AAPL ) shares dropped as Berkshire Hathaway ( BRK/A ) cut its stake in the

company.

The recession concerns followed weak economic data last

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

Indexes pared 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.

Shares of Apple ( AAPL ) fell 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," rose sharply.

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.

According to preliminary data, the S&P 500

lost 159.20 points, or 2.98%, to end at 5,187.36 points,

while the Nasdaq Composite lost 567.78 points, or 3.38%,

to 16,208.38. The Dow Jones Industrial Average

fell 1,030.47 points, or 2.59%, to 38,706.79.

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.

The so-called Magnificent Seven group of stocks has been the

main driver for the indexes hitting 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.

U.S. Treasury yields tumbled to their lowest level 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 the economy is heading into a downturn.

Traders now see a 92.5% 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.

Pringles maker Kellanova ( K ) soared after a Reuters report

said candy giant Mars was exploring a potential buyout of the

company.