The state of the market isn’t doing much to assuage recession fears.
At the opening of trading this morning, the S&P 500 stock index slipped by 2%, finding itself in bear market territory. Compared to its most recently-recorded high, the S&P has dropped a total of 20%, marking one of the worst index drop-offs in recent memory. The other major indexes didn’t fare much better, with the Dow shedding 2% as well and the Nasdaq losing 2.8%.
Analysts suspect this drop-off is a direct result of the new inflation report released on Friday. According to new statistics from the Federal Reserve, the rate of inflation in the United States economy is becoming untenable, which means that substantial interest rate hikes are likely not too far off. The Federal Reserve is scheduled to hold a meeting this Tuesday to discuss the implementation and scale of these rate hikes. Investors are concerned that if the hikes are too extreme, the US economy could enter a new recession.
“US equity markets are reacting negatively to last week’s hotter-than-expected reading for inflation,” Sam Stovall, chief investment strategist at CFRA, said in a statement. “Investors are now increasingly concerned that the Fed is too far behind the curve to slow the rise in inflation without throwing the economy into recession.”
U.S. stock futures fall, ‘Black Monday’ trends on Twitter amid recession fears https://t.co/7qgILjA8kV
— The Washington Times (@WashTimes) June 13, 2022
The market has been grappling with inflation fears since the beginning of 2022 due to a combination of global and domestic concerns. These include, but are lot limited to, ongoing supply chain issues affecting retailers and the damage to global oil infrastructure brought about by the Russian invasion of Ukraine.