With a possible shutdown of the government, rise in interest rates and the ongoing trade war with China, US stocks experienced the worst week ever in the past decade. There was lower closing of the 3 indexes, with technology-focused Nasdaq falling 20% from its high point, making it a part of ‘bear market’ territory. The weekly drop was the greatest ever in percentage to be recorded since 2008. S&P 500 saw a 7% drop as well. While the weekly percentage drop is the highest since August 2011, that of Nasdaq is the greatest since November 2008. The Dow Jones Industrial Average dropped by 6.8%.
Fearing slow economic growth both abroad and domestically, investors are backing out of stock market. US Federal Reserve increased rates of interest and said that it’ll continue in the upcoming year, although slowly. The economic growth, which was earlier in September predicted to be 2.5%, has now been changed to 2.3%. Michael Hewson of CMC Markets said that US economic indicators have been softer in recent times and economist Elliot Clarke said that Washington’s political brinkmanship is making current situation worse. Trade adviser to Trump, Peter Navarro, heightened the tension by saying that China and America might not be able to reach an agreement which would end the trade war between them.
Sportswear Company Nike experienced strong sales and John Williams, chief executive and president of New York’s Federal Reserve Bank, said that market turmoil would be taken into consideration before interest rates are further hiked. Twitter and Facebook saw 6% drop each, Amazon slipped over 5%, while Microsoft and Apple tumbled over 3%. Nasdaq index dropped almost 3%, S&P 500 slid over 2%, and Dow slipped 1.8%. Economic growth in most recent quarter was however 3.4%, leading economists to think that the Wall Street fall might recover. Counter-arguments followed saying that prolonged downturn could result in spreading of sell-off.