Dow Falls 700 Points As Euro Sinks To 20-Year Low Against The Dollar With Global Recession Fears ‘Front And Center’

Topline

The stock market fell on Tuesday, adding to recent losses as investors returning from the holiday weekend face renewed fears of a looming recession, while shares of Tesla slumped after the electric vehicle maker reported fewer deliveries than last quarter.

Key Facts

Stocks moved lower: The Dow Jones Industrial Average fell more than 2.2%, around 700 points, while the S&P 500 lost 1.9% and the tech-heavy Nasdaq Composite 0.8%.

Markets are coming off of their worst first half of a year since at least 1970, with the S&P 500 in bear market territory as surging inflation and rate hikes from the Federal Reserve stoke rising recession risks.

Though U.S. markets were closed for the July 4th holiday, global recession fears continued to rise after volatile trading in European markets, with the euro sliding to a 20-year low against the U.S. dollar on Tuesday.

Shares of Tesla slid nearly 5%, meanwhile, after the company said it had sold just over 250,000 electric vehicles in the second quarter of 2022—an 18% drop from around 310,000 in the previous quarter.

With the company struggling to ramp up deliveries and posting numbers that were “materially less” than expected, Tesla’s stock could plunge another 40% by the end of the year, analysts at JPMorgan warned.

Investors are also keeping an eye on government bond yields: With the benchmark 10-year Treasury note falling in recent days, it is now trading close to the 2-year yield and signaling a potential yield curve inversion—a closely watched recession indicator on Wall Street.

Crucial Quote:

“Stocks are poised to open back up in the red for the quarter . . . welcome back to 2022,” said Bespoke Investment Group in a recent note. “Recession fears are front and center again this morning, especially in Europe as concerns of natural gas shortages heading into the winter months put the likelihood of recession as near certain with the only question being how long and how deep.”

Tangent:

“Most people are still looking at market advances with skepticism,” and sentiment is “hardly bullish,” says Vital Knowledge founder Adam Crisafulli. “Investors are very anxious about the approaching earnings season,” he notes.

What To Watch For

A big slate of economic data this week. Investors will be watching closely for the release of the June jobs report on Friday, with job growth expected to slow to 250,000 nonfarm payrolls added (down from 390,000 in May), according to estimates from Dow Jones. The Federal Reserve will also release minutes from its latest policy meeting on Wednesday.

Further Reading:

Stocks Close Out Worst First Half Of A Year Since 1970 (Forbes)

Warren Buffett’s Favorite Stock Soars, Netflix Fumbles: These Are The Best And Worst Performing Stocks Of 2022 (Forbes)

Stocks Are Crashing But History Shows This Bear Market Could Recover Faster Than Others (Forbes)

Dow Plunges Nearly 500 Points, Recession Fears Resume As Consumer Confidence Hits New Low (Forbes)