What Does the Stock Market Crash Mean for the Economy?
Summary from the AllSides News Team
A subpar jobs report on Friday triggered a market downturn, which has continued into Monday.
The Numbers: On Monday morning, Japan’s Nikkei was down 12.4%, and benchmark indexes in South Korea and Taiwan were both down over 8%. The S&P 500 opened down about 4% Monday, with the Nasdaq falling 6%.
What's Next?: While some have reported on recession fears, others are more optimistic, though for different reasons. Peter Cohan for Fortune (Center bias) said the Federal Reserve may cut rates sooner than scheduled. A writer for Reason (Lean Right) advocated for long-term optimism about the economy but cautioned the Federal Reserve: "While an expected interest rate cut in September isn't a big deal by itself, if it's the start of a larger stimulus campaign, any short-term economic boost will come at the cost of a slowdown later." Whereas, a U.S. News & World Report (Lean Left) analyst said, "Ironically, the downturn in the market has brought interest rates lower and that is doing some of the Fed’s work for it. That makes it less likely that the central bank will act before September, as a panic move between meetings would be read as very negative by the markets," and that the downturn could be a market correction. "The next few days could be critical," he continued.
Word Choice: The Reason headline called it a "stock market slump" while Fortune labeled it a "plunge" and said "markets cratered." U.S. News & World Report referred to a "market meltdown," indicating different perceived levels of severity of the downturn.
Featured Coverage of this Story
From the Center
Don’t Panic Over Market Plunge — Fed May Cut Rates Sooner
Markets cratered around the world Monday. Japan’s Nikkei fell more than ever — down 12.4% while “benchmark indexes in South Korea and Taiwan were both down more than 8%,” noted the Wall Street Journal. The S&P 500 opened down “about 4% Monday, with the Nasdaq falling a larger 6%,” the Journal reported.
Unless you are feeling adventurous — in which case now could be a good time to buy companies on your shopping list at a lower price — just hold on.
From the Left
Reason to Panic? The Global Stock Market Plunge, Explained
A global market meltdown continued Monday as the Dow Jones Industrial Average dropped by 1,000 points before recovering slightly on fears the U.S. economy was weakening and a series of other concerns combined to throw investors worldwide into a panic.
What Happened?
The selling began Friday as labor market data for July came in well below expectations with 114,000 jobs added instead of the 175,000 or so that had been forecast. Add in some less than positive earnings news from tech giants Amazon and Intel and the bonhomie that had developed following...
From the Right
Recession Is Not Inevitable, Despite Stock Market Slump
It's OK to calm down about the economy. Yes, Friday's unemployment news was bad. Yes, the NASDAQ and Dow Jones neared correction territory on Friday morning. And yes, the Sahm Rule Recession Indicator has now been triggered. Odds are, though, a recession is not imminent.
Here are three reasons why, in descending order of optimism. One, recent growth has been strong. Two, the economy has been near full employment for a while, and some kind of job growth slowdown is almost inevitable. Three, we're past the window where Federal Reserve actions can influence the...
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