Massive decline seen in financial markets

Dow Jones and other financial markets seen a massive decline

Massive decline seen in financial markets! What’s next to happen

May 18, 2022 is one of the worst one day losses that international markets have faced. Last time this type of huge drop was seen in June 2022.

The main reasons of this drop include new pandemic lockdowns in China, continued supply chain gaps, hyperinflation, increasing fuel and food crises due to Russia and Ukraine conflict, and increasing monetary policy rates. These all are the situations where economic activity gets slow and results in the crises in financial markets.

Indexes like S&P 500 ended a day with a drop of -4.045%, Dow Jones closed at a drop of -3.57%, and Nasdaq closed -4.73%.

Wall Street has lost around quarter of its stock market value that creates worries for the U.S. Retail consumers have been considered as the main losers in these bearish financial markets.  

What caused the markets dropped?

According to the Paul Christopher, head of global market strategy at Wells Fargo investment Institute said that, “This sell off in all the markets has been caused due to the rising inflation against expectations”.

The stocks that are directly related with interest rates have also seen a major drop and stocks are responsible for the Nasdaq and S&P 500 decline. Tesla, Amazon, Nvidia closed around -7% and Apple -5.6%.

The head of investment strategy at SoFi said, “The next six months are very important for the international markets and these markets may recover as this situation doesn’t need to be much fearful”.

Jerome Powell-Federal Reserve Chair said, “We are trying our best to kill inflation as a result we may have to push interest rates higher. This process can be aggressive if inflation numbers may not see some decline”.

According to Powell, “There is an unconditional need of getting price stability for the growth of economy at any cost. Businessmen and workers both are facing troubles due to rising inflation”. If we calculate S&P 500 has been dropped about 18% and Nasdaq has dropped about 27% in 2022.