Global investors and economists have been talking about a potential American recession, resulting in U.S. stocks closing lower on Tuesday. The stocks that lost snapped the country's 3-day winning streak that investors have closely been watching for potential lows.
Multiple outlets reported that multiple indexes incurred losses on Tuesday as talks of a potential recession ensue. The S&P 500 index slashed 0.8 percent, the Dow Jones Industrial Average lost 0.7 percent or 173.35 points, while the Nasdaq Composite Index shed 0.7 percent.
The said indexes saw increases on Monday but increasing uncertainty over the U.S. economy drove down hopes for a potential trade deal as U.S. President Donald Trump continues to deny that a recession is at hand.
Aside from stocks shedding some points, the U.S. Treasury note's yield TMUBMSD10Y, +2.78 percent declined to 1.557 percent, losing 4.6 basis points amid fears of an incoming economic crisis.
Analysts said it didn't help that Trump continued to lash out at the U.S. Federal Reserve following Tuesday's losses. He indicated that the Fed may not be doing its job in stimulating the economy.
For Trump, it would be best to make additional tax cuts and payroll tax cuts. He said many people are expecting to see such cuts at this point, in hopes of alleviating fears about a recession that will affect the entire world.
Meanwhile, the White House has maintained that there is no recession closing in on the United States. Other analysts supported the administration's claims, stating that the consumer will continue to save the economy.
Chief Investment Officer at Cresset Capital Management, Jack Ablin, noted that the U.S. "is a consumption-based economy," therefore household spending has the power to uphold the economy despite uncertainties in trade.
On the other hand, other economic analysts believe there are still multiple storms the U.S. has to shield itself from before recession talks reach a calming point. Trade disputes with both China and Europe could further hurt the U.S. economy.
While the U.S. economy may not need any assistance from monetary policy changes, some experts believe trade tensions could take a toll not just on the consumer but also on other economies trading with the U.S.
So far, the world's biggest economy is at risk of potentially losing steam in consumer spending if prices go up due to tariffs. A re-escalation of its trade war with China could also dampen supposed growth in various markets.
Finally, a global slowdown that could impact U.S. markets could drag the economy to unexpected heights. The upcoming Brexit could also put pressure on American dealings with both the European Union (EU) and the U.K.
