Sharp decline in US stocks sparks investors’ concerns
Date
11/17/2024 2:36:34 AM
(MENAFN) US Stocks experienced sharp declines during Friday's trading session as investors became increasingly concerned about a slowdown in the pace of US interest rate cuts. Economic data appeared to support this notion, and there was growing anticipation of a market correction, potentially triggered by the upcoming shift in economic policies under President-elect Donald Trump. The S&P 500 dropped 78.65 points, or 1.32 percent, to close at 5,870.52, while the nasdaq Composite lost 429.11 points, or 2.25 percent, to settle at 18,678.54. The Dow Jones Industrial Average fell 306.30 points, or 0.70 percent, ending at 43,444.56.
The steep declines marked the second consecutive session of losses, following comments from Federal Reserve Chairman Jerome Powell, who stated that there was no rush to cut interest rates. These remarks led to an increase in bond yields, which in turn pressured stocks that are sensitive to interest rate changes, especially in the tech and growth sectors. The economic data released on Friday, including stronger-than-expected retail sales in October and a rebound in import prices, further fueled concerns that inflationary pressures might persist longer than anticipated.
Adding to the market uncertainty, the economic data released earlier in the week showed inflation remaining stable, which reinforced fears that the Federal Reserve may not be able to ease interest rates as quickly as hoped. While Wall Street had previously seen record highs after the results of the US elections, with many attributing the gains to the expected policies of the Republican victory, the atmosphere has shifted to one of caution. Investors are now bracing for a potential correction, driven by the anticipation of policy changes under the incoming Trump administration.
Looking ahead to January 2025, when Trump will assume office, there is growing unease over the potential impact of his economic policies, particularly the possibility of renewed trade wars. The shift from the post-election euphoria to a more cautious outlook reflects concerns about the economic challenges that could arise as Trump begins to implement his policy agenda, with investors fearing that the initial market optimism may soon give way to a more turbulent period for US stocks.
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