Fears of recession in the US: Should you worry about it?
recession in the US have contributed to the collapse in equity markets. Major US stock indexes fell sharply on Monday. The Dow Jones Industrial Average fell 986.88 points, or 2.48 per cent, to 38,750.38, the S&P 500 lost 152.23 points, or 2.85 per cent, to 5,194.33 and the Nasdaq Composite dropped 563.51 points, or 3.36 per cent, to 16,212.65.
Sensex closed Monday's session over 2,200 points lower, while Nifty slipped below the 24,100 level due to selling in heavyweights. Meanwhile, the market capitalisation of all listed companies on BSE declined by Rs 15.34 lakh crore to Rs 441.82 lakh crore. On Tuesday, the BSE Sensex and the NSE Nifty50 lost early gains and settled in the red.
What fuelled the recession fears
Besides the geopolitical situation in the Middle-East and unwinding of the Yen carry trade, fears of a potential recession in the US is panicking investors.
Analysts and economists consider two consecutive quarters of contracting the Gross Domestic Product or the GDP to be a recession. The National Bureau of Economic Research has defined recession as a significant decline in economic activity that is spread across the economy and that lasts more than a few months.
Fears of a U.S. recession intensified after data released post-market hours on Friday showed that job growth in July slowed more than expected.
