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Is the market sell-off signaling recession?

Is a recession coming?

The stock market’s dizzying plunge, sparked by the fast-spreading coronavirus, seems to be heralding a U.S. downturn.

But while the virus is pummeling America’s travel and tourism industry, disrupting manufacturing supply chains and setting off a historic market sell-off, it likely won’t tip the U.S. into recession unless it spreads across a wider swath of the nation, economists say. To date, there have been more than 600 cases and 22 deaths in the U.S.  

“The stock market is not the economy,” says economist Ryan Sweet of Moody’s Analytics. 

Still, of the 12 U.S. recession since 1945, eight were preceded by bear markets (a decline of at least 20% from a recent peak) and three were preceded by market corrections (a drop of at least 10% from peak), says Sam Stovall, chief investment strategist at CFRA Research. The Standard & Poor’s 500 index is about 19% off its February 19 high.

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