Since the beginning of the year, the stock markets have declined due to negative investor sentiment about surging inflation, Russia’s invasion of Ukraine, rising crude oil prices, and the possibility of aggressive interest rate increases by the Federal Reserve to tame the multi-decade high inflation. However, the markets did rebound briefly from their lows before negative news fostered fresh selloffs.
Many economists expect the economy to witness recessionary pressure amid soaring inflation and a tight labor market. The latest U.S. inflation data has revealed that inflation rose 8.5% in March, skyrocketing to its highest level since December 1981. The U.S. economy added 431,000 jobs in March as the labor market became tight. Oil prices continued hovering above $100 per barrel--high crude oil prices have often precipitated a recession. Due to a confluence of these factors, the stock market is expected to remain under pressure in the near term.
