By Jason Galanis
Wall Street experienced a sell-off day, as the Dow dropped 292 points and the S&P 500 faced a near 1.5% decline. It is believed this dramatic fall is in response to the latest economic reports that did not deliver good news to the American people.
In recent months, investors have been flooding the market with money, as they had an optimistic stance that the stumbling economy would cause the Federal Reserve to keep interest rates low for the foreseeable future. It could be said that now bad news is no longer going to be seen as good news, as this investment strategy quickly came crumbling down on Wednesday.
Recent reports from the government indicating that purchases on large home items such as refrigerators, and volatile transportation items, dipped dramatically in February and have potentially caused investors to lose faith in the markets.
Additionally, retail sales have seen an unexpected decline while home sales have also dropped off dramatically. These disappointing economic indicators have caused investors to pull back, as indicated by Wednesday’s poor showing for Wall Street.
In response, many financial institutions have scaled back their growth predictions for the US economy.
Speculation has been raised over whether or not US stocks are too pricey, as the S&P 500 is trading at 17 times its forward earnings. This has caused worry among financial leaders that companies are not seeing the expected growth, which is also indicated by institutions such as Goldman Sachs changing their forecasts to a more pessimistic outlook on the economy.