- Stocks plunge on the fears of an impending economic downturn
- Nike and Boeing perform dismally
- Indonesia airlines cancel on a major deal with Boeing causing a drop in shares
Friday saw stocks drop drastically as fears mounted over the global economy which were fueled by morose manufacturing data out of Europe and the Federal Reserve’s melancholic view on the U.S. economy.
Financial Experts Warn of a Looming Recession
Nike and Boeing performed poorly as the Dow went down 350 points. A decline in the energy and financial sectors oversaw the S&P 500 fall 1.6 percent, as the wide index headed for its worst day since January 3, 2019. A slump in the Nasdaq witnessed its decline by 2.1 percent.
“There’s a host of worries out there, and those worries continue to mount,” said Peter Cardillo, a chief market economist at Spartan Capital Securities. “The fear of recession is increasing.”
“As a result, we have a market that is rethinking some of the optimism that was priced in.”
Nike shares pressured stocks with their athletic branch falling by a margin of 5.3 percent with sluggish sales growth in North America.
Indonesia airline Garuda caused a lapse of 2 percent for Boeing airlines after it canceled a $6 billion order for Boeing 737 Max jets.
There was a downgrading of manufacturing activities in Germany marking its lowest in more than six years in March according to IHS Markit. Manufacturing and service industry in France slowed down to its lowest in three months and two months respectively. Manufacturing fell for the eurozone as a whole dropping to its lowest since April 2013.
Germany 10-year bond yield was sent to its lowest by these data since 2016, marking a negative dip in its territory.
The wide curve between the 3-month Treasury bill returns and the 10-year note yield turned negative for the first time since 2007 in the U.S. which caused it to invert the so-called yield curve, according to Refinitiv Tradeweb data. An inverted yield curve happens when short-term rates surpass their longer-term counterparts. This is considered a trustworthy indicator of a recession coming in the near future.
These moves were adopted after the U.S. central bank adopted a dovish stand on Wednesday taking investors by utter surprise, this will mean that no further interest hikes this year and ending its balance sheet roll-offs.
The Fed’s new outlook on interest rates boosted market sentiments, but the reasons for the whole issue caused some concerns.
“Let’s not lose sight of the fact that we’ve had a nice rally over the last couple of weeks,” said JJ Kinahan, a chief market strategist at TD Ameritrade. “Today is not a great day, but after a strong week or two you tend to get a bit of a sell-off.”
“Now, should you be cautious? Absolutely, because the slowdown worldwide is something people need to be cautious about.”