Friday was a bloodbath on Wall Street, with investors selling off stocks and pushing the market down to its lowest levels since the Covid lockdown disaster in 2020. The Dow Jones Industrial Average fell more than 700 points today, in the latest bear market crisis to besiege US markets.
One this is certain: with the US midterms approaching in one month, this is not good news for Joe Biden and the Democratic Party.
Oh, and expect another major interest rate hike by Thanksgiving.
Are we staring down the barrel of a stagflationary crisis?
Rachel Siegel from the Washington Post writes…
The bad market news — and the Fed’s forecast of a sharply slowing economy — could also affect campaigns for this fall’s midterm elections in Congress, where Republicans have been hoping that voters will blame President Biden and Democrats for high inflation. Inflation has become a somewhat less salient issue among voters, as people say they’re feeling better about the economy and getting some breathing room thanks to falling gas prices. But turmoil in the markets could become a hot topic on the trail.
The full weight of the Fed’s actions since March — pushing a key interest rate up by three percentage points already, with more increases still to come — may not be felt until later this year or next. But financial markets are taking in the central bank’s promise and sending alarms back out, making clear that no matter how many times Fed officials say they’re going to do whatever they can to crush inflation, the idea still roils Wall Street.
“I believe it’s probably going to get worse before it gets better,” said Dan Ives, managing director and senior equity research analyst at Wedbush Securities.
Analysts say the drop is not only about the Fed’s moves so far, but also about further tightening ahead and the growing likelihood that the Fed cannot get inflation down without causing a recession…
Continue this story at the Washington Post
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