Anxiety over a slowdown in the U.S. economy intensified Monday, with a retreat in markets that began last week snowballing into a global rout.

The turmoil was the latest example of how distinct economic forces can ricochet across markets, forcing down company stock prices and erasing billions of dollars in value. In this case, a rapidly rising yen over the past week had disrupted the flow of global capital, prompting a pullback from some popular investments.

But the sell-off quickly expanded into a more widespread panic that the Federal Reserve may have waited too long to start cutting interest rates, threatening the strength of the U.S. economy.

Those fears were amplified by a U.S. employment report released Friday that showed significantly slower hiring by employers, with the unemployment rate rising to its highest level in nearly three years. From the moment stock markets first opened for trading in Asia, and then through trading hours in Europe and the United States on Monday, prices plummeted.

Monday’s decline hit Silicon Valley hard. Intel and Nvidia, both based in Santa Clara, experienced some of the worst falls.

Analyst Pat Moorhead isn’t too worried about the future of the industry. It’s expected, he said, to see stock prices drop after years of wild investment.

“The harder you rise, the harder you fall,” Moorhead said. “The stock goes up into the stratosphere, it’s just natural that investors would be a little nervous.”

Analyst Maribel Lopez said that Monday’s decline marks Wall Street’s realization of a more momentous trend — tech growth, which once seemed limitless, is slowing.“We’re entering a phase where the go-go days of tech are more tempered than they have been in the past. It’s no longer the gold rush,” Lopez said.

According to Lopez, a host of factors including inflation, layoffs and supply chain issues are contributing to Monday’s decline. But undoubtedly, a major player is artificial intelligence. In recent years, investors have placed big bets on the emerging technology that haven’t yet paid off.

“There was an expectation that, while there is heavy AI spending, there will also be heavy AI revenue growth. And not a lot of stocks have actually been able to transition from that spending to growth,” Lopez said.

On Wall Street, the S&P 500 fell 3%, its sharpest daily decline since September 2022.

While some investors saw the sell-off as a signal that the economy was at risk of recession, others maintained that the move was more the result of a pullback from overextended bets, especially on tech stocks and artificial intelligence. Despite its recent decline, the S&P 500 is still up nearly 9% for the year, a healthy return.

“Markets are a little bit out of control,” said Andrew Brenner, head of National Alliance Securities. “This is just total panic. It’s not real but it is painful, and it could be with us for a few weeks.”

Few corners of the financial market were spared from the turmoil as investors cashed out and sought refuge from a broad-based slump. Oil futures, gold and cryptocurrencies were also swept up in the turmoil. A number of big technology stocks — which have sway over the market because of their size — tumbled, and the tech-heavy Nasdaq Composite index fell about 3.4%. In Europe, the pan-European Stoxx index fell 2.2%.

The moves were a sharp reversal in major stock markets, which for much of the past year have risen to new heights, propelled by optimism about cooling inflation, solid labor markets and the promise of artificial-intelligence technology. The turmoil also came during the usual summer lull in trading volumes, which can lead to abrupt and severe swings in prices.

Have we reached a second dot-com bust? The jury is still out, Moorhead and Lopez say.

Lopez believes that, while it’s too early to say for sure, “we are well on our way towards it.”

Moorhead is more optimistic, giving the industry another year and a half to prove its AI mettle to investors. And until then, he predicts, the cash will continue to flow.

“There’s just too much downstream FOMO — the fear of missing out,” said Moorhead.

Economists are increasingly worried that the Fed is behind the curve in cutting interest rates and will have to cut borrowing costs swiftly as it scrambles to prevent the economy from deteriorating further.

Staff writer Cameron Duran contributed to this report.