![]() ![]() ![]() Reducing interest rates is the bank’s biggest tool to fight economic downturns. The Fed has another problem to worry about as well. The drop underscored fears on Wall Street that continued interest rate increases could trigger a recession - a concern Trump has expressed numerous times.īloomberg reported last week that Trump has considered trying to fire Powell, though it’s unclear if the president can do so. Earlier this month, at the Fed’s last meeting of 2018, Chairman Jerome Powell signaled that the central bank’s board of governors would likely issue fewer rate hikes next year, but investors were not appeased and the Dow Jones Industrial Average fell 352 points.įederal Reserve Board Chairman Jerome Powell speaks during his news conference after a Federal Open Market Committee meeting in Washington, on Dec. The Federal Reserve raised interest rates four times this year. The Federal Reserve and interest rate hikes China also reported earlier this month that it recorded lower than expected industrial production and retail sales, an announcement that quickly rippled through the global markets and helped spark a nearly 500-point drop in the Dow. The Shanghai Stock Exchange has lost a quarter of its value so far this year, and China’s GDP grew by 6.5 percent in the third quarter - still a large gain, but the slowest growth since the global financial crisis a decade ago. READ MORE: What history teaches us about the latest stock market plunge The trade war, which has centered on China, continued to escalate until Trump and China’s President Xi Jinping agreed earlier this month to hold off on imposing new tariffs for 90 days.īut even if a more permanent agreement can be reached by March, some damage has already been done. allies - from the steel and aluminum tariffs. In May, Trump decided not to spare any country –including U.S. The stock market woes come despite signs that the general economy is still doing well. The Trump administration’s tariffs on imported aluminum, steel, and other goods have introduced a large amount of uncertainty into the global economy. Many of the same factors that affected the economy in 2018 are likely to continue into the new year. The federal government shutdown that began early Saturday has only added to the anxiety. President Donald Trump’s trade war with China, the slowdown in global economic growth and concern that the Federal Reserve was raising interest rates too quickly all contributed to a pessimistic reaction from the stock market. The stock market woes come despite signs that the general economy is still doing well - with record low unemployment, strong GDP growth and relatively low inflation.īut this year a number of other factors outweighed those positive economic indicators. The stock market is on pace for its worst December since 1931, but it also set record single-day gains Wednesday, when the Dow jumped by more than 1,000 points. The vast majority of losses have come since October, when the stock market, which was experiencing the longest bull run in history, took a turn for the worst. Since the beginning of the year, the Dow Jones Industrial Average has lost about 10 percent of its value, as did the S&P 500. 2018 was not a good year for the stock market. ![]()
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