Ugly day for global stocks across Wall Street, Europe, Nikkei

NEW YORK, United States — Global markets were a sea of red Monday, with Japan's Nikkei suffering an historic drop and New York falling hard in a pullback attributed to economic unease and fallout from recent monetary policy shifts.

Following a decisive down day in Europe, all three major US indices spent the entire day in the red, with the Dow Jones Industrial Average losing 2.6%, or more than 1,000 points, to finish at 38,703.27.

The losses followed down days last Thursday and Friday on the heels of poor US employment data and a negative survey from manufacturers that sparked worries about a recession.

Seizing on that point, some market watchers have called for the Federal Reserve to cut interest rates -- perhaps even in an emergency meeting -- after the central bank kept rates unchanged last week.

But market watchers are also focusing on the ripple effects of Japan's decision last week to hike interest rates, which boosted the yen and slammed Japan's Nikkei equity market, which dove 12.4%.

"It's an abrupt move in a market that has a lot of tentacles," Art Hogan of B. Riley Wealth said of the Japan currency shift, which is believed to have led to speedy liquidations in other markets.

Hogan believes the Japan currency movements are much more a factor in the turbulence than recession fears.

Monday's drop in Tokyo's Nikkei was the worst since the Fukushima crisis in 2011. The index also suffered its biggest ever points loss, shedding 4,451.28.

The Bank of Japan last week raised interest rates for the second time in 17 years, with talk of another rate hike to come, while the US Federal Reserve has hinted at a cut as soon as September.

"Investor sentiment was down as the US employment data for July came in lower than expected, raising fears that the US economy is slowing more than expected," IwaiCosmo Securities said.

Friday's much-anticipated report showed the US economy added just 114,000 jobs last month, well down from June and far fewer than expected, with unemployment at 4.3%.

Some analysts pointed to the "Sahm Rule," which says an economy is in the early stages of recession if the three-month moving average of unemployment is 0.5%age points above its low over