Markets are uneasy as a U.S. recession looks more likely

Marketwatch ^ | September 5, 2024 | Gordon Gottsegen

[lasereye]

Will the U.S. economy be able to beat inflation without going into a recession?

That may be the question investors are asking themselves as more economic data is pointing to a softening economy.

Recession fears started to percolate in early August, when July jobs data showed the unemployment rate growing to 4.3%. The increase in unemployment triggered the recession-indicating Sahm rule and a deep stock-market selloff over the next two trading days.

“The unemployment rate is increasingly more of a watch point for investors,” Matt Stucky, chief portfolio manager of equities at Northwestern Mutual Wealth Management, told MarketWatch.

Although the market was able to bounce back from those losses, investors have been extra sensitive to weak economic data and talk about an upcoming recession.

This week, more data showed recession risks were increasing.

On Tuesday, the Institute for Supply Management’s manufacturing index reported its fifth straight month in negative territory, signaling that the manufacturing sector was in a deep slump. That spooked investors. The Dow Jones Industrial Average fell 1.5% that day, while the S&P 500 declined 2.1% and the Nasdaq Composite dropped 3.3%.

On Thursday, ADP data showed that 99,000 jobs were added in August. That was a drop compared to the 111,000 jobs added in July, pointing to a slowdown in hiring. It was the slowest monthly job growth seen since early 2021.

All this is building up to the crescendo that is Friday’s U.S. employment report. Remember, it was the employment report released in early August that sparked a market selloff. Wall Street consensus estimates the August unemployment rate at 4.2%, according to FactSet data. If the unemployment rate comes in higher than expected, it could lead to a negative reaction by markets. But even if it doesn’t, investors still may still be on edge.

[lasereye]

I am guessing that with the election so close the Establishment Survey jobs number will be pretty good (that is to say fake). The media pays attention to the Establishment survey and ignores the Household survey - which has been bad for awhile now. If the Household survey is bad Wall Street will know that the Establishment number is fake and there'll be a big stock market selloff tomorrow.

[Parley Baer]

I agree. The government will fake the job numbers only to be revised after the election.

[unclebankster]

A sell off before November is very likely.

The size & duration is anybody’s guess.

[Nextrush]

There’s a trade war with China already underway Smoot-Hawley for our times.

The mainstream media out to lunch IMHO.

[Bobbyvotes]

Stock Market can crash because of Overvalued market. Look at Walmart. Selling at P/E 40+. like a AI stock! It is just a freaking retailer! It has gone parabolic like a high tech stock.

[Obadiah]

The revised -downward - numbers are what matters. Nobody trusts the Democrat lies report.

[Theoria]

September is normally a bad month. Vix and other vol is rising, post Sept Opex should resolve lower. However, Bears have been annihilated of late, the long term trend is always higher.

[Bobbyvotes]

If you take into account loss of purchasing power of US dollar, market is no higher than in mid-1960’s.

[Theoria]

Not true, even if ya say, the only way to hold the line on inflation is play the game and invest. The amount of money repubs and dems throw and destroy the country is enormous, the death of savers is inverted into the markets.

[Leaning Right]

I feel bad for the Fed. They desperately want Trump to lose and the Deep State to win. But what to do?

Lower interest rates, and borrowers are happy but inflation takes off.
Raise interest rates, and inflation cools but borrowers are upset.

I predict that that they will lower rates right before the election. That will make borrowers happy. But inflation won’t kick in until later.

Sing the song, children. “Happy Days Are Here Again!” 🎶

[Bobbyvotes]

I actually did the calculation last year of stock market high in mid-1960’s and adjusted it for inflation. Market had higher purchasing power in 1966 than in 2023.

[canuck_conservative]

Are the Phillies going to win the World Series this year??

[Bobbyvotes]

But I agree that to protect your money from inflation, stock market is useful. If you can stomach the volatility.

[Theoria]

Not at all, markets go higher, especially under the printing press. Look at Obama, Trump and Biden.

Here is a link:

Inflation Adjusted S&P 500

[delta7]

All traditional metrics and rules show we are already in Recession.

[delta7]

Stock markets mean NOTHING in financial health terms. Proof? Pull up Venezuela and Argentina stock markets- society collapses and the market keeps going up….last I checked Venezuela stock market was at 750,000.

[Gay State Conservative]

later

[KamperKen]

“All traditional metrics and rules show we are already in Recession.”

Absolutely correct. Real output has been contracting since mid-2021.

[fella]

The U.S. has been in a recession since it went off of the silver standard. What we’re entering is a depression. Beggars on the streets, Hoovervilles everywhere and families living in their cars just like “The Dusters(AKA Okies).

[MinorityRepublican]

At least we'll have "joy".