The Dow Jones Industrial Average fell 809 points, or 2.4 percent today, as investors sold stock amidst concerns of coming recession.
The Dow faced a significant decline since trading opened this morning. By the market’s close, it had reached one of its lowest closing values in the past year. Similar declines were observed on other market indices – including the S&P 500, which fell by 2.8 percent, and the Nasdaq Composite (comprising technology company stock), which lost 4 percent of its value.
Most experts ascribed the loss to stocks by big technology companies, whose increases in value have come to represent a sizeable portion of market indices. Alphabet, Apple, Microsoft, and Twitter all declined by several points. Each of these companies was due to present earnings reports after the close of trading, which investors did not expect to bode well.
Alphabet, in particular, announced slower sales growth and a drop in earnings from ad-revenue on Google and its other platforms. Netflix, which reported a decline in subscribers on Friday, had previously experienced a 30 percent decline in its stock price amounting to a loss of $54 billion.
Perhaps the biggest loss on Tuesday, however, came from Tesla whose CEO Elon Musk recently bought Twitter, and whose stock declined by over 10 percent, making for a loss of $100 billion. According to analysts, investors feared that Musk may sell a portion of his stock in the company to finance his Twitter acquisition.
The declines follow a trend from Friday, when the Dow saw the single largest decline since March of 2020 amidst the onset of the Covid pandemic.
Federal Reserve Chair Jerome Powell announced the same day that he would be looking to raise interest rates “expeditiously” in May to curb inflation.
“In our experience, when that happens, it usually means the overall index is about to fall sharply with almost all stocks falling in unison,” wrote Mike Wilson, Morgan Stanley’s chief investment officer, on the firm’s website. He also expressed concerns that such hikes would affect consumer spending and the burgeoning housing market, ushering in a recession.
The news bodes ill for the Biden administration, which is facing criticism for its economic policies as the 2022 Midterm elections approach. In January, White House press secretary Jen Psaki had claimed that "the president does not look at the stock market" when judging the economy, a statement that attracted widespread criticism from investors and Republicans.
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