The stock market fell on Tuesday during the opening of the U.S. market following concerns about a possible recession in the U.S. and this has affected investor sentiment.
The Dow Jones Industrial Average Index fell 420 points, or about 1.4%. The S&P 500 was down 1.5%, and the Nasdaq Composite for high-tech stocks was down about 1.6%.
Concerns about economic growth are hampering the market to take aggressive steps with the U.S. market facing difficulties to recover. U.S. Secretary of the Treasury Janet Yellen and Chinese Vice Prime Minister Liu He held a virtual call to discuss macroeconomic issues.
The 10 -year Treasury yield benchmark has declined in recent days even as the Federal Reserve has pledged to fight inflation aggressively. The 10 -year yield is now trading close to the 2 -year yield. It is the latest indication observed by market players especially on Wall Street.
Allianz chief economic adviser Mohamed El-Erian is of the view that the U.S. market is currently expecting slower growth ”. The outlook for the second half of this year looks vague with Credit Suisse strategist Jonathan Golub stating on Tuesday that he expects the U.S. will try to avoid a recession and at the same time its S&P 500 target for the end of the year is reduced to 4,300 from 4,900.
Golub added, “the economic downturn can be characterized by a decline in employment accompanied by the inability of consumers and businesses to meet their financial obligations. At this point, neither of these conditions are happening ”.
Investors are now focusing on employment report data for June on Friday. Based on Dow Jones estimates, job growth may slow in June with 250,000 jobs added, down from 390,000 in May. Economists expect the unemployment rate to remain at 3.6%.
