Updates live: Trump threatens China with more prices unless Beijing is found

Here’s what you need to know about a lower market.

What is a lowering market?

A lowering market is a Wall Street term for a slowdown in the sustained market, when a stock market index closes 20% compared to its last peak.

The 20% threshold signals the pessimism of investors on the future of the economy.

Are we on a lower market now?

The S&P 500, the US reference stock index opened its doors on Monday. The index was already down 17.4% compared to its last summit on February 19, and if it closes Monday trading with a loss of at least 3.1%, this would make it pour into a lower market.

Morgan Stanley analysts have warned that even greater decrease is possible. Goldman Sachs reduced its economic growth forecasts on Monday, citing an increasing risk of American recession next year.

The Nasdaq composite index, as well as the Russell 2000 index of small businesses which are more vulnerable to economic prospects, are already on a lower market.

It seems worrying. What should I do with my money?

A drop in the market can offer opportunities to investors with long horizons. Investing in low -cost diversified index funds has been a successful strategy over the years, through high and bears markets.

But given the concern of deepening that Mr. Trump’s trade program could trigger a serious economic slowdown, volatility and uncertainty are high. People with shorter investment times, as well as those approaching retirement, often move more assets in bonds, which historically showed greater resilience during slowdowns.

When was the last bear market and how long do you last?

The US stock market has always been down, generally in a few years. At the beginning of 2020, the triggering of the coronavirus sparked global closures, causing a short market of sharp bear. The federal reserve has intervened and the markets found their losses in six months. At the end of 2021, the fears of an increase in inflation leading to highly higher interest rates attracted the S&P in a lower market at the beginning of 2022, which lasted a large part of the year.

The S&P has entered a bears market at 15 times since 1929. Bear markets lasted 18.9 months on average, according to Howard Silverblatt, principal analyst of the index for S&P Dow Jones Indices.

How do be bear markets affect the economy?

Bear markets are sometimes pioneers from recessions, but not always.

References, defined by the National Office of Economic Research as “a significant drop in economic activity that spreads in the economy and lasts more than a few months”, are much more perilous for the economy. References often lead to job losses as savings contract, as in the summer of 2020, when unemployment levels have reached their worst levels from the Great Depression.

What will happen next?

Trump repeated his federal reserve calls on Monday to reduce interest rates. But the Fed does not seem in a hurry to intervene.

Jerome H. Powell, the president of the Fed, said on Friday that the central bank should assess the economic effects of the prices before taking measures, and he warned that reduction rates could expand inflation.

A new wave of Trump prices that should take effect this week could lead to even more troubles on the markets. Journalists asked by the turmoil and the fears of a recession on Sunday, Trump said that “sometimes you need to take medication to repair something.”