All major US stock indices are slumping for the second day in a row, and there seems to be no reason. Or, perhaps, there’s every reason.
Analysts have blamed a grab bag of causes: A survey predicting a gloomy month for manufacturing, a slowdown in stock buybacks, ongoing anxiety about the impact of the US-China trade war, declines in Europe, impeachment jitters, and even the specter of an Elizabeth Warren administration spooking investors.
The S&P 500 has tumbled 3.5% from Monday through mid-day today (Oct. 2), and the Dow Jones Industrial Average and Nasdaq have seen similar declines, erasing their gains from the third quarter. Legacy airlines were particularly hard hit, with Delta, American, and United among the worst performing stocks after Delta said it expected its labor and maintenance costs to rise slightly.
Stocks also plunged in the fourth quarter of 2018—the Dow Jones fell 11% in the final three months of last year—for many of the same, amorphous reasons: anxiety about global trade and nervousness about a coming recession.
It’s worth noting, of course, that a decline of a few percentage points—seen in the context of recent years—is a tiny correction during a powerful, decade-long bull market. But that long, steady climb is what gives so many investors pause: All good things must end, and a downturn seems inevitable, if not historically overdue.
The slump, if it continues, will also add pressure for the Federal Reserve to do something—anything!—to invigorate the economy. It’s unclear, however, whether modestly lower interests rates can counteract all the other forces weighing against investors.