Behind the plunge in US stocks

Since February 20, the US stock market has fallen continuously, the Standard & Poor's 500 Index supported by industrial stocks has fallen nearly 9% since February 20 to today, the Dow Jones Index has fallen more than 6% in less than a month, the Nasdaq index has fallen more than 11%, why the US stock market has plunged continuously, what are the influencing factors behind its slump, This article will lead the reader to carry on the in-depth analysis and discussion.

Trump's tariffs have been a big factor in the US stock market plunge. Since Trump took office, he has announced a series of tariff policies, including 25% tariffs on Mexico and Canada, and 25% tariffs on all steel and aluminum imports to the United States. In the long run, the tariff policy may cause the cost of raw materials to rise, which is bound to lead to more pressure on the operation of enterprises. In addition, the tariff policy may directly cause the price of some imported goods to rise, so many foreign trade enterprises may pay more marginal costs in operation. In reality, the increase of enterprise operating costs is often directly manifested as a decline in operating profits, which may lead to a decline in the net asset value of enterprises. On the other hand, the increase of enterprise operating costs is also likely to lead to a decrease in the investment willingness of market investors, which further leads to a plunge in the stock market.

From a broader perspective, Trump's policies since he took office on January 20 have some instability, for example, after the US government announced that the 25% tariff measures on Mexican and Canadian products took effect, it soon adjusted the measures to exempt imported goods in line with the "US-Mexico-Canada Agreement". The repeated changes in Trump's policies have caused market concerns to a certain extent, and the instability of this market speculation has "fueled" the continuous decline of the US stock market.

The Federal Reserve's monetary policy is another important factor affecting the U.S. stock market. From an economic point of view, the decline in the interest rate of a country's currency will increase the supply of the country's money market, which will lead to currency depreciation and promote the country's people's investment in securities and other related fields. Since September last year, the Federal Reserve began a new round of interest rate reduction adjustment, interest rate cuts will promote the market's search for higher investment returns, thereby supporting the relevant investment in the securities industry. However, in January this year, the Federal Reserve pressed the "pause button" to cut interest rates, and according to the market forecast that the Federal Reserve will keep interest rates unchanged at the meeting in March this year, which also made the stock market, which would have been more bullish, temporarily "cold", in the background of reduced capital inflows.

Economic data is a barometer of the economy, but also an important reference basis to promote the stock market. Looking at the US economic data, the non-farm report released by the US Labor Department in February showed that the number of non-farm jobs in the United States increased by about 151,000 in February, and the unemployment rate rose to 4.1%. The non-farm data plays an important role in reflecting the US economy. In the non-farm report of the US in February, the increase of the number of jobs was lower than expected, while the unemployment rate hit a new high since November last year, which also reflected the risk of the US economy recession from the side. Therefore, the stock market, which is also an economic barometer, naturally fell continuously.

In summary, this round of stock market plunge in the United States is caused by many factors, and its occurrence has a great relationship with the standoff of the tariff war, repeated government policies, and the change of the monetary policy of the Federal Reserve. These influencing factors have increased the uncertainty of the American securities market, thus triggering market risks. So it is not surprising that the stock market, an economic barometer, has been falling.

Throughout the above, the risks of the financial system of the United States can not be ignored, investors should continue to pay attention to the relevant policies of the United States government, and to the monetary policy of the Federal Reserve to maintain attention, should strengthen their understanding of basic economic data, and according to their actual situation to carry out reasonable risk management, to make investment strategy adjustments.