GREENVILLE, NC (WITN) – The last few days have been bumpy for U.S. stocks, as on Monday, August 5, the stock market posted its biggest daily loss in nearly two years.
According to Nicolas Rupp, economics professor at the ECU, there is a certain uncertainty in the Middle East, which is leading to a decline in the US stock market.
The Equal Weight Index has fallen about 3.5% since August 1, compared to a 4.4% decline in the S&P 500, according to FactSet.
According to Rupp, rising tensions with Israel are a big factor and the Japanese central bank has raised its interest rates, causing a decline in the Japanese stock market that spread to the US.
Rupp also told WITN that there were a few factors responsible for the decline here in the U.S.: “Some slowdown in the U.S. economy, economic weakness, some increase in unemployment in the U.S., so there was more concern about the U.S. economy and also the Federal Reserve decided not to cut interest rates.”
While economists express concern about the possibility of a recession, Rupp says there are some factors that typically occur.
“In a recession, unemployment numbers have to rise, and right now we’re only seeing a slight increase in unemployment. Another issue with the weakness of the U.S. economy is that the economy relies on U.S. consumer spending, and rising credit card debt raises concerns that consumers may cut back on spending because of rising credit card debt,” Rupp told WITN.
Rupp said there could soon be some easing of tensions. The Federal Reserve has indicated that it is considering cutting interest rates next September. This should stimulate economic growth and thus lead to falling interest rates.
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