Dow Plunges After BlackRock Delivers Dire Economic Warning

Journalist:
Sam Bourgi @hsbourgi
July 8, 2019

The Dow and broader U.S. stock market declined on Monday after BlackRock, one of the world’s largest asset managers, warned of a deteriorating growth outlook for the global economy.

Dow Falls; S&P 500, Nasdaq Join the Decline

All of Wall Street’s major indexes traded lower on Monday, which reflected a rocky pre-market for Dow futures. The Dow Jones Industrial Average plunged 115.98 points, or 0.4%, to 26,806.14. The blue-chip index was down by as much as 189 points.

Dow Jones Industrial Average records triple-digit loss on Monday, extending its losing streak to two days. | Source: Yahoo Finance.

The broad S&P 500 Index of large-cap stocks declined 0.5% to 2,95.95, with six of 11 primary sectors reporting losses. Health care, materials, and information technology all underperformed the broader index.

Meanwhile, the technology-focused Nasdaq Composite Index fell 0.8% to 8,098.38.

Global Economy Faces Downside Risks: BlackRock

BlackRock, the $6.3 trillion asset manager, has downgraded its outlook on the global economy for the second half of 2019. | Source: Shutterstock.

BlackRock Inc. downgraded its outlook on the global economy Monday over ongoing trade tensions and emerging-market turbulence. The $6.3 trillion asset manager warned investors to expect slower growth in the second half of the year, primarily in China and Europe.

“Our view on China has become less positive, and as a result, the rebound we were expecting in Europe is not in the cards anymore. It’s a downgrade in the broader global picture, and it’s driven by the European and China view,” said Jean Boivin of the BlackRock Investment Institute, as quoted by CNBC.

The U.S. economy is forecast to grow just 1.8% in the second half of 2019. The world’s largest economy expanded 3.1% annually in the first quarter, much higher than initially forecast.

The gloomy outlook has prompted global central banks to respond with more interventionist policies. Not only have the European Central Bank and Bank of Japan committed to loosening monetary policy, but the Federal Reserve is also eyeing rate cuts for the first time in over a decade. For the Fed, that’s a stark contrast to the policy regime of a year ago when officials were actively raising interest rates.

Click here for a real-time Dow Jones Industrial Average (DJIA) price chart.

Last modified (UTC): July 8, 2019 19:23

Sam Bourgi @hsbourgi

Financial Editor to CCN Markets, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi. Sam is based in Ontario, Canada and can be contacted at sam.bourgi@ccn.com