The stock market opened on Monday to crush the hopes of investors as the Nasdaq, and the Dow Jones hit new lows. The Nasdaq saw record lows that it had yet to see for two years, and the Dow Jones managed to drop by another 200 points.
The previous week for stocks was very rough, as the Dow, Nasdaq, and S&P 500 continued to bleed by an average of 1% every day of the week. The only reprieve that these major stock options saw was on Monday and Tuesday, where all of them managed to rally by 3.0% on average.
However, the high hopes that came from one of the biggest 2-day rallies in months were followed by an almost immediate downturn. And as investor sentiment continues to worsen with time, the stock market is still struggling to recover from this bear market.
What is Causing this Bear Market?
There are many reasons why the current stock market is looking so bearish, with one of the latest ones being the newest jobs report. The latest jobs report showed that the US managed to create over 260,000 jobs and saw that the rate of unemployment is continuously dropping.
While the report itself was fairly optimistic, the stock market had a very different outlook. Following the report’s release, the feds introduced another round of interest rate hikes, which led to further drops throughout various markets.
Furthermore, there is also the issue that tech companies are seeing their prices drop continuously with no signs of stopping. Even some of the biggest tech firms like Apple, Alphabet, Amazon, and Microsoft are losing big swaths of their prices. And as these tech firms especially find it hard to recover from these massive drops in prices, many investors are even considering moving away to other currency markets.
The US Likely to Go Through Major Recession
Another factor that contributed to the dropping prices of the stock market was the announcement of Jamie Dimon, the CEO of JP Morgan. According to his announcement, Dimon has predicted that the recession has been significantly underplayed, as it will likely be more than just a slight economic contraction.
There was also a slump in semiconductor stock, which came after the Biden Administration issued restrictions on selling advanced computing parts to China. Despite being closed, the bond market also saw futures for the 10-year Treasury were also much lower than expected.
A Brighter Horizon?
As the stock market moves forward with depressingly low rates, it is not a very good start to the week. However, investors are still holding out hope that the market could see a short rally by the end of the week.