Wall Street investors lowered shares on Tuesday as worries rose over a possible recession amid record inflation levels and rising energy prices.
The Dow Jones Industrial Average fell more than 600 points at 10 a.m. Tuesday, while the Nasdaq fell more than 1.1%.
The S&P 500 also lost 1.67% of its value on Tuesday. The index has fallen more than 20% since reaching an all-time high on December 31.
JPMorgan Chase was down 2.5% while Wells Fargo was down 2.7%.
Energy companies had some of the biggest losses, as oil prices in the United States fell 5%. Exxon Mobil was down 2.8%.
Morgan Stanley analysts believe the U.S. economy is firmly in a slowdown as the Russian invasion of Ukraine drags on, putting pressure on an already tight oil market.
Investors continue to be weighed down by concerns about a possible recession. Bloomberg via Getty Images
The global economy is also affected by the continuing supply chain difficulties exacerbated by the blockades in China, where the government is pursuing its “Zero COVID” strategy.
Michael J. Wilson, a senior Stan Stanley strategist, said the Federal Reserve’s aggressive moves to curb inflation by raising interest rates could plunge the economy into a recession.
Wilson’s team of researchers wrote in a note obtained by Bloomberg that a contraction in the market could cause the S&P to fall even further to 3,000 points, which is about 22% below its current value.
While fears of a recession abound, optimists point out that the labor market remains strong.
Gene Goldman, investment director at Cetera Investment Management, told The Post that current metrics may not tell the whole story.
Wall Street worries that the Fed’s aggressive moves to control inflation could plunge the economy into a recession. Bloomberg via Getty Images
“It’s important to note that recession data is historically based,” Goldman said.
“In other words, we could be in a recession right now and not know it until after the recovery begins.”
The latest Bloomberg Economics analysis puts the odds of a recession next year at 38%.
The model takes into account data points such as housing permits, the gap between 10-year and 3-month Treasury yields, and consumer surveys.
“The risk of a recession in early 2023 has increased substantially,” said Anna Wong, chief U.S. economist at Bloomberg Economics.