Stocks Plunge Again, Sending Dow Jones into Bear Market Territory

Sep 26, 2022 | Political News

The Dow Jones Industrial Average continued to plummet on Monday as the stock market entered a bear market amidst increasingly worrying news about the state of the American economy.

A bear market, defined as indexes sinking 20 percent from a recent high point, is often a sign of an economic downturn or recession.

The Dow dropped 329.60 points, or 1.11%, to 29,260.81, reaching its lowest point of the year. The stock index is down 20.4 percent since its January 4 high, according to CNBC.

Similarly, the S&P 500 declined 1.03% to 3,655.04. During the day, the index fell to 3,644.76 which was just eight points away from its lowest point this year.

The recent 75bps interest rate hike announced by the Federal Reserve last week is one of the major drivers. Further complicating matters, the British Pound dropped to a record low of $1.0382 on Monday under the presumption that the Bank of England would similarly raise rates.

The interest rate hike is the third time in a row that rates have increased by three-fourths of a percentage as the central banker vows to “keep at” the battle against inflation, per Reuters.

STOCK MARKET NOW BELOW WHERE IT WAS WHEN BIDEN TOOK OFFICE

“Reducing inflation is likely to require a sustained period of below trend growth,” Federal Reserve Chairman Jerome Powell said in a press conference on Wednesday announcing the increase. “And, it will very likely [mean] some softening of labor market conditions.”

“Restoring price stability is essential to set the stage for achieving maximum employment and stable prices over the long run,” Powell said, as reported by CNBC. “We will keep at it until we’re confident the job is done.”

The rate hikes combined with tax cuts in the United Kingdom have caused the US Dollar to increase significantly in value compared to the Pound Sterling. The euro has also hit its lowest point of exchange with the dollar since 2002.

“Such U.S. dollar strength has historically led to some kind of financial/economic crisis,” wrote Michael Wilson, chief U.S. equity strategist at Morgan Stanley. “If there was ever a time to be on the lookout for something to break, this would be it.”

The stock market, which once boomed under the Trump administration, has taken a beating in 2022 thanks to Biden’s economic policy and reckless spending. Americans’ investments are suffering and Biden has no solution in sight.

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