Recession Risk after Stock Market Regains Ground
US stocks look to be holding steady after a bullish week where much of the lost ground was regained after a sharp downturn.
US stocks tumbled after Black Market Monday, following a less than positive unemployment report. The next week saw the market regain much of its lost ground.
That was last week, when a new jobless claims report was released and showed positive news on that front. Now, the US stock market has opened for Monday and is holding fairly steady with where it was before the weekend.
The Dow Jones Industrial Average is down just 0.03% from the previous day of trading. The S&P 500 gained 0.36% from Friday, and the Nasdaq Composite grew by 0.68%. The relatively flat market is in a much better place than it was in early August, and investors are experiencing less risk and volatility in their trades.
What Is the Risk of Recession?
Many investors feared that a recession was imminent after the stock market experienced its worst day of trading in months, but then many of the indicators softened and the market turned around quickly. Now, analysts say that the risk of recession is much lower. Goldman Sachs said that more likely than recession right now is expansion. The US economy is not looking as bad as it did a week ago.
There could be interest rate cuts coming soon from the Federal Reserve, and that could help spur the economy and boost the stock market. The Nasdaq Composite and its tech-centered stocks will likely benefit the most. AI stocks in particular have been very hot this year.
A recent 2% boost to the economy has given analysts a rosier view of where things are at, and we expect this week’s stabilizing start to keep the risk of recession low. How long the market can stay stable may depend on whether there is new jobs data coming out that changes the outlook. That will be one of the most significant factors for economists and market analysts right now, since it was jobs data that caused the market to go bearish in the first place.
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