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Shares Take A Plunge As Worries About Economic Growth Seep In

Wall Street is witnessing a depressing outcome as the three of the major indexes have gone down by 3%, marking one of the steep downfalls of the week. The Nasdaq fell by over 283 points, settling at 7,158.43, which is 3.8% lower than the previous figure, while the Dow Jones index shed 3.1% points, which is a loss of 800 points, reaching 25,027.07. On the other hand, S&P 500 stopped at 2,700.07, which is a decline of 3.24% or 90 points.

The confusions about the sudden truce in between the US and China have contributed to the fall. The losses have touched nearly every sector in the market while the financial industry paid dearly for the same.

Shares Take A Plunge As Worries About Economic Growth Seep In

The analysts believe the latest alteration in the share market has resulted from the differences between the interests paid on the long-term and short-term US bonds. The breach has deepened in recent times as the investors are looking for higher rates on the short-term debts due to the probability of the rate rise and inflation. Simultaneously, they are looking for lower returns on the long-term debt as they have the perception that it will not be affected by inflation. Also, it is expecting the economy to grow at a slower pace in the upcoming decade, which is the prime reason for the lower returns.

However, the huge gap between the 5-year and 3-year disappeared this Monday. This contributed to the anticipation surrounding the 2-year and 10-year bonds, which resulted in the drop. Also, when the rates for the short-term rates rise above the rates of the long-term, a recession may knock the door.

The analysts from the S&P Global also stated that they were expecting the US economy to grow at a slower pace but the recession may be peeking through the closed doors which will result from the increased volatility in the financial segments.


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