On Monday, US technology stocks performed poorly, with a decline of more than 1.5%, dragging down the three major stock indexes of the US stock market: the S&P 500 index fell 16.34 points, or 0.59%, to 2750.79 points, falling below the 200-day moving average support level. The Dow Jones Industrial Average closed down 89.44 points, or 0.35%, to 25250.55. The Nasdaq Composite Index closed down 66.15 points, or 0.88%, to 7430.74 points. In addition, the US Department of Commerce released data showing that the monthly retail sales rate in September was unexpectedly much lower than the expected 0.6%, only 0.1%, and the core retail sales fell to a 16-month low. The US federal budget deficit rose to $779 billion in fiscal year 2018, the highest level since 2012.
The three major US stock indexes suffered the biggest weekly decline since March this year, and Trump attributed this entirely to the Fed’s aggressive actions. The market is hotly discussing whether the plunge is the end of the bull market or a short-term correction, and there is no conclusion yet. Industry experts said that a number of risk factors, such as the Fed's interest rate hike weighing on markets, a possible global economic slowdown, rising Treasury yields, corporate earnings and trade agreements, are still playing a role and the stock market may not have hit bottom. Although the IMF lowered its global economic growth forecast for the first time in two years, from 3.9% in January to 3.7%, some analysts pointed out that the IMF's expectations are too optimistic. Robert Gordon, an American economist, said that a sharp slowdown in productivity growth in developed countries would put the global economy at risk, and the effects of a series of stimulus measures such as tax reforms in the United States would only be short-lived. Gordon pointed out that this means that the US market still faces a large downside risk.
What worries the market is that the wave of global stock market selling seems to be showing signs of a comeback. Mike Wilson, chief equity strategist at Morgan Stanley, predicts that the sell-off in the US stock market will only get worse. Wilson said in the report, "We still believe that the global risk asset market is now in a rolling bear market. The reason for this situation is that global liquidity problems are getting worse and worse, and growth has peaked.” Wilson believes that the S&P 500 will continue to trade between 2,400 and 3,000 in the next year. Although investors are difficult to choose stocks in this environment, they can still buy stocks that have reached a lower stock price.