Overall, the U.S. stock market has taken a rough beating over the past few months, especially as inflation rates continue to skyrocket and investors become considerably more risk-averse.
According to Fortune, this week’s Wall Street activity marked a new record — one not favorable to President Joe Biden and his administration. As the market tanked on Monday’s open, all gains in the S&P 500 since the 46th president took office have officially been erased.
“The market index, on Monday, closed down 151 points at 3,749.84, notably below the 3,798.91 level, which is where it closed on Jan. 19, 2021,” wrote Fortune’s Chris Morris.
Along with hitting a 52-week low, the S&P also formally entered a Bear market, after years of hanging in Bull territory.
The Dow Jones Industrial Average (DJIA) and Nasdaq Composite, along with the crypto market, which was booming as little as a year ago, also closed lower than what the markets were when Biden entered office in Jan. 2021.
The market’s huge drop on Monday, which was nearly as bad as drops seen in the past several weeks, happened in the wake of rumors that the Federal Reserve is set to take aggressive actions to combat the out-of-control inflation crisis.
The latest rumors point to a possible rate hike of 75 basis points this week, which would mark the highest rate hike since 1994.
The Federal Reserve is likely to discuss making its biggest interest-rate increase since 1994 when policymakers meet this week, as a range of new data suggest that inflation is coming in hotter and proving more stubborn than they had hoped. https://t.co/rFqtjNztwq
— The New York Times (@nytimes) June 13, 2022
Drastically raising interest rates is one of the first tools the government uses to combat inflation, but it doesn’t always work as intended, and some economic experts describe rate hikes — especially aggressive ones — as “blunt weapons.”
While most economic experts have agreed that America is set to enter a recession, if it hasn’t already, U.S. Treasury Secretary Janet Yellen denied that was the case when asked recently by a reporter what her thoughts are on the evolving crisis.
“Don’t look to me to announce it. I’m not going to announce it. I don’t think we’re going to have a recession,” Yellen responded during a CNBC interview on Thursday.
The Fed is likely to announce the rate hike on Wednesday, as is customary. Markets will react accordingly.