As a nonprofit credit counseling agency, ACCC is always staying updated with financial news. This week the Dow fell 800 points! If that seems like a lot, the experts tell me it is indeed a large drop. Since the stock markets influence most of the American economy in some way or another, it’s important to take a moment to review the facts. What happens after the Dow tanks?
Dow Tanks- Is there a Recession Coming?
According to CNBC (“Dow tanks 800 points in the worst day of 2019 after bond market sends recession warning”), the news of the Dow dropping doesn’t mean a recession. However, why it fell could indicate one in the near future. The Dow reacted to the news of bond yields. It dropped below the curve… which means trouble. Investors got spooked and moved their assets. This caused the Dow to drop. When this has happened in the past, a recession follows a couple years later.
“Historically speaking the inversion of that benchmark yield curve measure means that we now must expect a recession anywhere from six-to-18 months from today which will drastically, and negatively, shift our medium-to-longer term outlook on the broader markets,” Tom Essaye, founder of The Sevens Report, said in a note on Wednesday.
Keep in mind that no one can actually predict the future. And all recessions aren’t the same. The stock market and economy are constantly shifting. Stay vigilant as you plan for retirement savings to maximize your assets and avoid major losses.
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