U.S. Stock Investors Keep Stumbling Into a World of Hurt
When the globe sneezes, they duck under the covers.
We are the world, for better or worse.
Photographer: Patrik Stollarz/AFP/Getty Images
It’s often said that the stock market and the economy are not the same thing. These days, though, the U.S. stock market seems more connected than ever with the global economy, perhaps even more so than with the U.S. economy. The question is whether that makes sense.
More evidence of the U.S. stock market’s dependence on the global economy surfaced on Tuesday, with the Dow Jones Industrial Average falling nearly 400 points. The S&P 500 Index lost 1.2 percent, its worst day in a little over a month. The impetus for the sell-off was political instability in Italy, bringing renewed fears about some sort of European Union exit — Italeave, or Quitaly — as well as renewed signs that President Donald Trump’s trade war with China could be back on. The White House said on Tuesday morning that it would proceed with its proposed 25 percent tariff on $50 billion worth of Chinese imports. Prominent economist Carmen Reinhart warned at a conference over the weekend that the strength of the global economy had become overstated recently.