Wall Street Panicking Over State Of The Economy

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It appears as if investors are beginning to figure it out.  Bad economic figures continuously pour in; however, thus far the Federal Reserve refused to perform a rate cut.  We’ve seen this before, and it didn’t end well.  

It’s often stated that "he who hesitates is lost"; in this case the Federal Reserve's hesitation might mean a massive amount of economic discomfort in the months that lie ahead.

Stocks dropped significantly last week as a much weaker-than-anticipated July job report ignited concerns that the U.S. economy might be spiraling into a recession...

Broad market index dipped 1.84 percent to end at 5,346.56. Nasdaq Composite lost 2.43 percent to close at 16,776.16, which brought the reduction for the tech-heavy index from its latest all-time high to over 10 percent. Dow Jones Industrial Average declined 610.71 points, or 1.51 percent, to end at 39,737.26. During its session low, this 30-stock index was actually down 989 points.

Stocks plummeted after July’s job growth in America slowed down more than predicted, whereas the unemployment rate increased to the highest point since October of 2021. Nonfarm payrolls rose by only 114,000 in July, according to the Labor Department, a gradual slowing from 179,000 jobs that were added in June and under the 185,000 forecasted by economists who were polled by Dow Jones. The U.S. unemployment rate rose to 4.3 percent.

The ten-year Treasury yield dipped to its lowest point since the month of December when investors flooded into bonds for safety upon the fear the Feds made an error last week by keeping interest rates at present levels.

During the day, a few megacap names witnessed substantial losses, as Amazon's 2nd-quarter outcome sparked concerns from investors about Big Tech's blowout levels of AI-associated capital spending. Amazon slid 8.8 percent after they missed the Street's revenue estimates and issued a less-than-stellar forecast. Meanwhile, Intel cratered 26 percent after they announced layoffs and weak guidance. Nvidia lost 1.8 percent, after a 6 percent loss one day before.

The Nasdaq is the 1st of the 3 major benchmarks to get into correction territory, down over 10 percent from their record high. Dow and the S&P 500 were 3.9 percent and 5.7 percent below their record highs, respectively

In September, a lot of people still think that the Federal Reserve will give us a cut in rates.

Wall Street’s narrative is changing.

For a long time, traders placed their bets on the Feds slashing rates in September, and Jerome Powell, Fed Chair, pretty much confirmed this last Wednesday.

This rate cut, forecasted in 6 weeks, was priced into stocks that have been increasing over the last couple of months, hoping for a cut. Rate cuts usually juice stocks, because they reduce borrowing costs for companies and may help increase profits.

However, now, fear is beginning to take hold, as concerns arise that the Fed might not be acting rapidly enough to keep the U.S. job market in good condition.

Claudia Sahm, an economist, is a prominent specialist who’s deeply shocked by the Fed's inaction.

Considering all the troubling figures that we’ve witnessed in recent days, Sahm is wondering what they’re waiting for...

If the Fed is beginning to get ready for reductions in interest rates, some portions of the market are growing impatient for it to come to fruition.

Jeffrey Gundlach, DoubleLine CEO, is using stronger language.

He states that they’re risking a recession by not making any moves...

Also, Gundlach believes the Fed is risking a recession by holding a hard line on interest rates.

There are, of course, a lot of numbers that tend to indicate that we might already be in the early phases of a recession.

For instance, recently the ISM manufacturing index was in contraction territory again last month...

Last month, the Institute for Supply Management (ISM) Manufacturing PMI registered 46.8 percent, which indicated that industry economic activity contracted at a quicker rate as compared with June's number of 48.5 percent.

Plus, last week, initial unemployment benefit applications soared to the greatest level in about one year...

Last week, new economic information uncovered that first-time unemployment benefit applications increased to around 249,000 filings. According to the Labor Department, that is the highest number since last August. Continuing claims, meanwhile, filed by those who’ve obtained jobless benefits for at least one week, soared to 1.877 million. That is the greatest level since November of 2021.

Related Reading: Are Americans Living or Surviving?

Unfortunately, many more layoffs are on the way as thousands of companies get into serious trouble all around the nation.

Last week, a furniture store that had survived the COVID pandemic, the Great Recession, and the Great Depression is now closing all 380 of their shops and currently filing for bankruptcy...

Badcock Home Furniture and More that has retail locations all over the South, announced their "going out of business" sale last Tuesday.

The business was bought in 2023 by the Texas-based furniture retailer, Conn’s, that filed for bankruptcy just last week.

This is how it ends, after 120 years.

There are, of course, a lot of additional retailers that also have been going out of business this year...

All in all, in 2024, retailers in the U.S. announced the shutting down of nearly 2,600 stores.

If the economy in the U.S. really is in ‘good condition’ like the media is insisting, why is this happening?

In 2024, red flags are sprouting up on a daily basis and the stock figures last week are just the beginning of a worse situation to come.

As conditions grow worse during the 2nd half of 2024 and beyond, our leaders are going to try to stabilize things by doing even more of what they’ve already been doing.

However, it’ll only make the crisis concerning the cost of living even worse, and it’ll only make our long-term issues even worse.

Our long-term problems, of course, are quickly becoming our short-term issues.

The whole system is shaking with tremors, and the bubble economy is ultimately heading toward oblivion.

We are, in my opinion, experiencing the top edge of an economic thunderstorm which will vastly intensify in the 2nd half of 2024.

And 2025’s outlook is downright dismal.

What should we be doing about all this?

In the short-term, you should protect your assets and build a massive emergency fund.  No matter what, you’ll need to have a sufficient amount of money to pay all of your bills.

In the long-run, I’m convinced that we’ll experience the most uncomfortable period in our whole history.

Our leaders have been making poor decisions for years, and now we’ve entered a period when the consequences of these decisions are going to become obvious to everyone.

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