Anxiety over a potential slowdown in the U.S. economy intensified on Monday as Wall Street and international exchanges saw sharp declines, sparking reactions from the 2024 presidential election candidates.
Global shares began collapsing at the end of last week when investors grew alarmed at the prospect of a U.S. recession. A U.S. Labor Department report released on Friday showed American employers added 114,000 jobs, a significant drop from the 179,000 in June.
On Monday, the global market plunge struck the U.S., as American stocks fell sharply after opening as the Dow Jones index plummeted more than 1,030 points, or 2.6 percent. Warnings have emerged that tech giants like Apple and Nvidia might be overvalued. On Friday, the Nasdaq composite entered a correction phase, marking a 10 percent decline from its recent high and continued to drop by an additional 3.4 percent on Monday.
This arrives among concerns that the Federal Reserve may have held its key interest rate too high for too long, heightening the risk of a U.S. recession, reported the Associated Press (AP).
Economists and Wall Street traders are now predicting that the Fed will cut its benchmark rate, which influences borrowing costs for consumers and businesses, much sooner than expected. Federal Reserve Chair Jerome Powell has repeatedly emphasized that the central bank can quickly lower rates if necessary to support the economy, according to the AP.
Despite recurring fears of an impending recession, these predictions have consistently proven wrong in the post-pandemic economy. Steady economic growth and robust hiring have endured against most analysts’ expectations, the news outlet added.
This comes as the 2024 presidential election is fast approaching, as Vice President Kamala Harris and former President Donald Trump are expected to face off in November.
In wake of the market news, Trump blamed Harris, taking aim at her in a video posted to his Truth Social account, sharing a video and captioning it “Kamala Krash.”
Trump previously took credit for record highs under President Joe Biden‘s leadership.
Newsweek reached out to the campaigns of Trump and Harris via email for comment on Monday.
A Harris campaign account, Kamala HQ, posted to X, formerly Twitter, a clip of Trump from a rally in which he says: “If Biden wins, you’re gonna have a stock market collapse the likes of which you’ve never had.”
It is followed by a separate image of a post made by Trump on Truth Social that says: “THIS IS THE TRUMP STOCK MARKET.”
The Biden campaign post reads: “Right: Trump in 2020 claiming the stock market will collapse if President Biden wins. Left: Trump [in January] desperately trying to take credit for the stock market hitting record highs under President Biden.”
Experts have reacted by advising investors to maintain a long-term perspective, particularly for retirement funds, adding that panic selling during market downturns typically results in greater losses, according to AP.
Jacob Channel, senior economist for LendingTree, noted that markets have historically recovered from worse sell-offs, the news outlet added.
