Crisis in the Markets: US Stocks Plunge, Real Estate Struggles, and Cryptocurrency Concerns

US Stocks Plunge: Economic Strain Looms. In the US stock market, the current situation is causing concern as the latest data on consumer confidence and home sales indicate that the US economy may be facing challenges. This comes as the Federal Reserve continues to reaffirm its commitment to keeping interest rates elevated for an extended period to combat inflationary pressures.

Assessing the Stock Market

The US stock market experienced a significant downturn. The Dow Jones Industrial Average saw a drop of 388 points, marking its worst performance since March. Similarly, the S&P 500 and Nasdaq indices both dipped by 1.4%. Contributing to the market’s unease due to concerning economic statistics.

Mega-Cap Stocks Tumble

Furthermore, the decline in mega-cap stocks has amplified the crisis. Industry giants like Apple (-2.3%), Microsoft (-1.7%), and Amazon (-4%) witnessed significant declines in their share prices. Tesla also suffered a 1.1% drop following reports of increased scrutiny by the European Union on the company and other carmakers exporting from China to the European market.

Real Estate Market Struggles

Difficulties in the real estate sector have added to market woes. Sales of new single-family homes in the United States plummeted by 8.7% in August 2023. Marking the most significant drop since September 2022. This decline is closely linked to the surge in mortgage rates, indicating the impact of the Federal Reserve’s aggressive approach to interest rate hikes.

Regional Variations in Home Sales

The regional breakdown of home sales paints a mixed picture. Sales plummeted in the Midwest (-17.2%), the West (-9.4%), and the South (7.5%), while they saw a slight increase in the Northeast (6.7%). The median price of new homes sold was $430,300, with the average sales price at $514,000, both slightly lower than a year ago.

Real Estate Market vs. Housing Prices

Interestingly, while home sales have slumped, real estate prices present a different narrative. The S&P CoreLogic Case-Shiller 20-city home price index in the US showed a 0.1% year-on-year increase in July 2023, the first rise in five months. This contradicted expectations of a 0.3% decline, driven by limited housing supply.

Rising Oil Prices and Energy Markets

Another significant factor contributing to the market’s turmoil is the surging oil prices. WTI crude oil futures rebounded to $90.7 per barrel, reaching their highest level since November. This surge is attributed to expectations of larger market deficits in the fourth quarter, outweighing concerns about a potential economic recession. Oil prices have risen by more than 25% since the end of June, driven in part by OPEC+ countries like Saudi Arabia and Russia extending supply cuts through the year’s end.

Swiss Franc Weakness and Currency Policies

In the currency market, the Swiss franc weakened, falling below the 0.91 USD level in September. This marks its weakest point since late November 2022 and is a result of diverging monetary policies between the Swiss National Bank (SNB) and the Federal Reserve. In a recent meeting, the SNB surprised markets by pausing its interest rate hikes for the first time since March 2022.

The SNB’s decision was driven by concerns that its tightening measures were dampening demand and slowing economic growth. Meanwhile, inflation forecasts in Switzerland remain relatively modest.

Currency Market News

Notably, the biggest losers in the currency markets include the Russian Ruble (-2.94%), South Korean Won (-1.06%), and Mexican Peso (-0.56%).

Cryptocurrency Market Declines

Finally, in the world of cryptocurrencies, both Bitcoin and Ether are experiencing declines. Bitcoin has slipped by -0.55%, reflecting broader market sentiment and potential concerns about regulatory developments in the cryptocurrency space. Unfortunately, the price of Bitcoin does not fulfill the safe haven role, as various analysts like to say.

For that reason

Investors should not panic during downturns. Remember that downturns are a normal part of the market cycle and that they eventually come to an end. The market is always providing new opportunities, even during downturns. Stay calm and seek those opportunities. And with us, you’ll find them much faster.