5 Reasons the Stock Market Just Had its Worst Day in 8 Months

-Source-Time-

U.S. President Donald Trump can blame more than just the Fed for the recent market sell-off.

It was the perfect storm that gave U.S. stocks their worst day in eight months, sending European shares to the lowest since December 2016 and driving more than 1,000 Chinese companies to fall by the daily limit. Here are the factors driving this week’s rout:

Fed Goes ‘Loco’

To put it more elegantly, the U.S. 10-year government bond yield surged to the highest since 2011 on Friday after Federal Reserve Chairman Jerome Powell heaped praise on the American economy, stoking expectations that monetary tightening will continue. While higher rates haven’t interrupted U.S. stocks’ broad uptrend so far, they may have crossed a threshold where they’re starting to weigh on pricey stocks and make equities less attractive. One thing to watch is U.S. inflation figures due Thursday, which will be key for gauging the country’s monetary path.

Sorry, Mr. President: There’s Also Trade

More companies are speaking up about the trade conflict’s impact on their business. Trinseo SA on Wednesday became the second chemicals maker this week to warn of disappointing results, partly due to trade uncertainty. Industrial supplier Fastenal Co. said new U.S. tariffs on Chinese goods are hurting customers.

“U.S. equity markets have been resilient to rising trade tensions compared to their global counterparts, leaving them susceptible to pullbacks as the costs become more apparent,” Mark Haefele, global chief investment officer at UBS Wealth Management, said in a note.

Also somewhat related: Luxury-goods are in a meltdown after LVMH confirmed that China was cracking down on undeclared imports of such products.

Rolling Down the Cycle

The International Monetary Fund cut its forecast for global growth this week, blaming rising trade tensions and stress in emerging markets. And while this year’s 19 percent gain in WTI crude gives some economies a boost, the International Energy Agency has warned that high prices due to falling supply from Iran and ... Read more