The stock market closed sharply lower Friday following an unsettling week of trading. With more uncertainty on the horizon, it's hard to predict just how low the indexes could fall, and some economists say a recession is closer than we may think.Â
Friday saw one of the worst trading days in recent history as the Dow Jones Industrial (DJI) tumbled almost 1,000 points, while the S&P 500 (S&P) fell 155 points and the NASDAQ fell 536 points. A retreat this size makes the previous months trading the worst performance for the NASDAQ since 2008 and the S&P 500's worst start to a year since 1939. Market losses have been seen across the board, with Amazon (AMZ) shares falling over 14% and with tech stocks like Microsoft (MSFT) shares falling almost 5%, which adds to the $449.5 billion loss for the company so far this year.
Late last week Deutsche Bank issued a warning regarding a looming economic recession within the next two years as a result of moves such as a sharp spike in interest rates needed by the Federal Reserve to tackle record-breaking inflation, the likes of which have not been seen for decades. While Deutsche Bank is not the first group to warn that current economic conditions are dire, they are the first Wall Street firm to do so, thus sparking a lot of attention.
All eyes will be on the indexes this week to see whether the bear market is here to stay, or whether Wall Street finds some optimism among recent negative news. On Tuesday, semiconductor giant AMD is due to report its earnings which will give a much clearer picture of the outlook of the current chip shortage. Good news from AMD could see a small rise for tech stocks such as Microsoft and car manufacturer stocks such as Ford (F) and Tesla (TSLA). However, if the news is negative we can expect to see the opposite.
While investors watch the markets, many politicians are eagerly watching the White House and applying pressure on the administration to take action and ease economic conditions. President Joe Biden drew criticism over the weekend for laughing and making jokes about his low approval ratings and taking shots at former President Donald Trump at the White House Correspondents' Dinner. Many felt that at a time when American families are hurting the most, Biden should not have been on national TV making jokes. President Biden has maintained very low approval ratings recently, with more than half of Americans disapproving of his performance in the White House. His response to a looming recession will be critical for reelection hopes in 2024 and also for the reelection of congressional Democrats in the 2022 midterm elections. On Tuesday, the State of Ohio will hold its primary election and turnout could give an indication of just how poorly the Democrat Party may perform in November if current trends continue.
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
