• US markets experienced a sharp decline on Tuesday as real estate data showed home sales dropped and Russian President Vladimir Putin suspended a nuclear arms control treaty with the United States.
• Investor fears of an extended recession have grown, and US tensions with Russia further disrupted global markets, causing gold, silver and crypto prices to drop.
• Morgan Stanley strategists warned of a “death zone” for the US stock market which could drop another 26%.
US Markets Suffer Substantial Losses
On Tuesday all four major U.S. benchmark stock indexes fell due to the weakening of the real estate market in the U.S., home sales dropping by 0.7% last month, and Russian President Vladimir Putin suspending the nuclear arms control treaty with the United States. The chief U.S strategist at Morgan Stanley said that this has caused the stock market to enter a “death zone” which is expected to cause stocks to fall another 26%.
Investors Fears of Prolonged Recession Grow
The National Association of Realtors (NAR) published a report on Tuesday showing that home sales had dropped by 0.7%. This along with increasing inflation rates have investors worried that this will lead to prolonged recession if the U.S Federal Reserve continues to raise interest rates . Additionally, increased tensions between Russia and the United States has many concerned about what could potentially be a third world war breaking out soon as Russia puts missiles on combat readiness after suspending their participation in New START Nuclear Treaty signed in 2010 between former presidents Dmitry Medvedev and Barack Obama meant prevent nuclear testing and war from occuring .
Morgan Stanley Warns of Stock Market „Death Zone“
Morgan Stanley strategists do not believe that this year will pivot from its current macroeconomic backdrop and chief U.S equity strategist Michael Wilson warned investors that they are now entering into a “death zone” for stock markets , expecting stocks to fall another 26% .
Implications Of Global Tensions On Economy
Global investors have been shaken by the current situation surrounding global tensions between the United States and Russia as well as weak real estate data which has contributed towards investor fear of an extended recession leading them to sell off their assets in order protect against potential losses . As such gold , silver , crypto prices have all dropped significantly over 24 hours while all four major stock indexes (DJI , GSPC , IXIC , RUT ) fell 1-2 % lower on Tuesday .
The current state of global politics coupled with weak economic data has caused alarm among investors who are now selling off their assets in hopes of avoiding potential losses should things take turn for worse due to increasing inflation rates caused by continued rate hikes from Federal Reserve . Furthermore Morgan Stanley’s chief U.S equity strategist Michael Wilson warned that we’re entering into what he called „the death zone“ for stocks expecting them fall even more than previously anticipated .