The fear of a recession in the US has increased as markets all over the world sank, and investors started to invest in safe haven assets because of the existing economic risks. On Monday, the Wall Street experienced a large crash, erasing all the gains that were made after the election.
The S&P 500 fell 2.7%, the Dow Jones Industrial Average fell 2%, and the Nasdaq fell 4%, with heavy losses particularly in the technology sector. Major tech firms were particularly affected by the sell off which is indicative of growing investor concern about economic risk.
The market nerves were further frayed by Donald Trump who, in a Fox News interview, would not deny that some of his policies might result in recession in the US or higher inflation. He called it a “period of transition” but offered no comfort to the investors who were worried.
The latest downturn erased the Trump-driven market surge that followed his election victory last November. The notion of a ‘Trump put’ — i.e., the administration might step in to calm stock prices — has also lost its edge, and this has increased investor uncertainty.
The dollar fell as expectations for a potential economic downturn decreased the risk appetite. However, gold prices rose as investors tended to look for safety. Analysts believe that if recession indicators keep on improving, then there could be more volatility in the markets in the coming weeks.
For the moment, everyone is waiting to see what will happen next, and investors around the world are waiting for the economic data, the signals from the Federal Reserve and any actions by the government that may help to calm the markets and avoid recession.
