A lot about recessions comes down to a way of thinking and, right now, investors are in a bad mood. This week was once again a lesson in risk management for many traders. Continued questions about trade, the midterm elections, the Federal Reserve’s pace of interest rate hikes and the state of the economy weighed heavily on stocks. And as a result, investors sold shares across the board in a big way. The markets are showing a loss for the year.
Adding fuel to the fire was generally less than bullish data. Several key metrics in housing, industrial production and economic health came in less than expected. Economists have begun to blame the trade war with China and the continued sour trade environment for the reductions. While still positive, dipping data isn’t a good sign. This put traders on notice.
And with several bellwethers reporting less-than-expected guidance figures, some of investors’ fears have come true. The effects of the tax breaks might not be enough to extend the bull market further.
All in all, traders spent the week selling rather than buying, and markets ended up lower.
Be sure to check out our previous week’s Wrap here.
