{"id":5484,"date":"2018-12-14T22:47:31","date_gmt":"2018-12-14T22:47:31","guid":{"rendered":"http:\/\/www.styledeals.co.uk\/blog\/whats-knocked-markets-off-course\/"},"modified":"2018-12-14T22:47:31","modified_gmt":"2018-12-14T22:47:31","slug":"whats-knocked-markets-off-course","status":"publish","type":"post","link":"https:\/\/www.styledeals.co.uk\/blog\/whats-knocked-markets-off-course\/","title":{"rendered":"What’s knocked markets off course?"},"content":{"rendered":"\n
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\n Are US stock markets entering a darker period?
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Just a few months ago, US financial markets seemed headed for a third year in a row of hefty increases.<\/p>\n

But shares have tumbled since October, retreating to lower levels than at the start of the year. <\/p>\n

That decline continued on Friday, as weak economic data in Europe and China sparked a late afternoon sell-off, sending all three major US share indexes lower.<\/p>\n

The Nasdaq dropped almost 2.3%, the Dow fell 2% and the S&P 500 sank 1.9%.<\/p>\n

For those invested in US stocks, the double-digit gains in seven of the last 10 years may still feel pretty good.<\/p>\n

But as Wall Street debate turns to just when a recession might begin, many investors are bracing for a rough patch. <\/p>\n

What’s behind the shift in sentiment?<\/p>\n

1. The tech boom was overblown.<\/h2>\n

At their peaks in October, the Dow and S&P 500 were up about 8% since the start of 2018. The Nasdaq had increased 15%.<\/p>\n

But the stock market surge was always a bit suspect<\/a>.<\/p>\n

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It outpaced other economic measures by a large margin and was driven by the tech sector, which accounted for roughly half of the gains on the S&P 500 up until mid-August of this year.<\/p>\n

Now some of the biggest winners – such as Apple and Facebook – have stumbled, dragging down the markets and making the weakness elsewhere more visible.<\/p>\n

All three indexes are off 10% from their earlier peaks – a decline often considered a correction.<\/p>\n

Until tech recovers, a broader market bounce is unlikely, said Terry Sandven, chief equity strategist at US Bank Wealth Management.<\/p>\n

“Looking to 2019, volatility is likely to represent the norm rather than the exception,” he says. “By many measures, the degree of investment difficulty is on the rise.” <\/p>\n

2. Interest rates are rising.<\/h2>\n
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\n How much higher will the Fed go?
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US central bankers have been raising interest rates since 2015, moving away from the unusually low rates put in place during the financial crisis as economic growth rebounds.<\/p>\n

Analysts are worried about how much more expensive borrowing might get – and whether companies and households will be able to handle the increased costs.<\/p>\n

Fears have been tempered recently by signals from the US Fed suggesting it may enact fewer rates rises in 2019 than previously expected.<\/p>\n

But some still worry about the risks from corporate debt levels, which have hit historic highs<\/a> – with an increasing percentage of the loans made to companies with already large debt loads.<\/p>\n

3. US economic growth is slowing.<\/h2>\n

US growth is expected to slow to 2.5% in 2019, down from about 3% this year, according to the IMF and Federal Reserve.<\/p>\n

Some closely watched industries and financial indicators<\/a> are already flashing warning signs of a more serious contraction.<\/p>\n