The stock market crashed in 2022 because of a consecutive rate hike delivered by Federal Reserve. Three leading equity indexes are down more than 1.5%; this trend is followed overnight in Asia and Europe.
The S&P 500 and the Nasdaq Composite are off more than 1.7%, while the Dow Jones Industrial Average (DJIA) is down 1.6%.
The S&P 500 is only about 45 points from the June lows, which marks a major watershed
for stock markets.
Factors Affecting Stock Market Crash:
- Stock market crashes are caused by various economic factors, e.g., panic selling, economic bubbles, and speculation.
- These crashes usually occur amid an economic crisis. Stock prices are changed according to supply and demand.
- In the current stock market, the hike in prices is aggressive. The stock market crash in 2022 has occurred since Wednesday; it is creating concerns about recession.
- The 2-year Treasury continues to rise to fresh 20-year highs, at 4.195%, while the benchmark 10-year Treasury is 3.734%.
- The treasury yield curve has reached to its maximum level in August.
The Fed Aims At Crushing Inflation And Less Unemployment:
According to Powell, Fed Chair, the economy cannot work smoothly if the price will not be stable; therefore, below-trend growth is required to reduce inflation.
The Fed was supposed to bring down inflation at any cost, or in other words, it was aiming at crushing inflation.
As per the consumer price index (CPI) report, inflation did not reduce in the US.
The rate of CPI remained higher in August 2022, up 8.3% year over year, and it was expected by analysts that this figure would drop at least 8%.
Stock Market Crash Today Leads To Market Volatility:
The stock market today is sharply stalling out, and the rate hike is not expected anytime soon.
From June till mid-August, the stock rate was hiked in the hope that inflation will be cooled off. But, the stocks after August were surrounded by extreme uncertainty causing inflation and a rate hike.
In this situation, it is hard to handle the stock market volatility. Long-term investments can turn down inflation and should be paid more focus to make your personal finances resilient.
The investments should be goal oriented, timeline and risk tolerance.
Fed could not make it possible to reduce inflation and prices.
To bring down prices and inflation, Fed needs to bring the policy rate well above 4%. Now, Fed will enhance rates again by 75 basis points.
Market Movers Stocks:
Have a look at some market-moving stocks:
Twitter (ticker: TWTR) slipped 1.3% Wednesday to $51.72 after billionaire Elon Musk, the chief executive of Tesla (TSLA), proposed proceeding with his acquisition of the social media company at the originally agreed upon price of $54.20 a share. Twitter shares closed Tuesday with a gain of more than 22%.
Shares of Tesla fell 3.5%. The stock ended Tuesday’s session up 2.9%, but not before swinging wildly throughout the session following the news that Musk was has plans to buy Twitter.
Lumen Technologies (LUMN) sank 9.3% and was on pace for its lowest close since 1991.
Lamb Weston Holdings (LW) jumped 4.2% after the maker of frozen potato products reported earnings for its fiscal first quarter that beat Wall Street estimates.
Energy stocks were higher as OPEC and its partners agreed to the biggest reduction in oil output since early 2020.
Exxon Mobil (XOM) climbed 4%, Halliburton (HAL) jumped 4.1%, Occidental Petroleum (OXY) was up 2.4% and Marathon Oil (MRO) was 2.6% higher.
RPM International (RPM) rose 3.4% after the maker of building materials delivered record sales for its first quarter and guided for higher sales than expected for the second quarter.
Amylyx Pharmaceuticals (AMLX) fell 4.5% after filing for a potential offering of 6 million common shares.
Helen of Troy (HELE) was up 3.4%, paring earlier losses of as much as 17%, cut its full-year earnings and revenue outlook.
Consumers increasingly adjusting their finances in response to rising inflation and the impact of higher interest rates.
Shares of Morgan Stanley were down 1% and Goldman Sachs fell 1.8%.
Amazon.com (AMZN) traded down 0.1% following reports that said the company stopped hiring through the end of the year.
According to the Wall Street Journal, Amazon was pausing hiring for corporate roles that include tech positions in its retail business.
Can The Stock Market Crash 2022 Be Recovered?
The stock market is affected by global events. Due to the energy Crisis in Europe, persistent inflation, and the Ukraine war, geopolitical uncertainty is going on.
Investments usually outpace inflation. We should avail the lowest prices strong companies offer; thus, we should take advantage of what the market offers.
What To Do When Stock Market Crashes?
- Try to sustain your Portfolio rebalanced
- Stick to long-term investment plans
- Invest in equities but be cautious
- Take advantage Of Tax Laws
- Focus on Personal Finances
- Do not sell in panic
- Avoid panic buys
The Bottom Line:
There is no denying that we are heading towards a recession, although slowly, we are trickling into it.
Keep investing to cool down inflation!
