New data shows a stock market crash is coming – not just a stock market correction, but a stock market crash. The latest stock market news shows the stock market crash of 2024 that has been warned about for months may finally be starting. This is because a 2024 recession may have already started, backed up by economic data that came out on Wednesday, indicating a recession in 2024. Stock market investing will get more difficult, especially stock market investing for beginners. But the stock market today doesn’t have to be difficult to profit from. Stock options are one way to make money during a stock market crash in 2024. So when will the stock market crash? When will stocks crash? The truth is, a 2024 stock market crash might already be starting, just like a 2024 recession might already be starting.
New data that is just been released over the past few days shows that a recession is starting, and this new data might lead to a stock market crash. Fears over this recession data has already caused the Dow to close lower for a third day in a row, as stocks’ second quarter woes continue. I’m going to show you all of the economic data that’s come out over the past few days, as well as what the Federal Reserve is saying. I’m also going to show you what the most recent earnings over the past two weeks are showing. And all of it points to a recession starting in the United States already. And we’re going to talk about how the stock market might respond to all of this. For those of you who are new to this channel, my name is Stock Curry. I’m a former Merrill Lynch and Morgan Stanley investment banker, and I’ve been trading for over 25 years.
Now whether or not we get a stock market correction or not, there are ways to make money no matter whether the stock market goes up or down. But one thing I do want to point out is that while a lot of the economic data is showing that a recession is starting, it is not all bad news – yet. On Wednesday, private payrolls increased by 184,000 in March, which was far better than expected. One of the gauges for whether or not we’re in a recession is the labor market. And what the data has shown time and time again, is that the labor market remains extremely strong. While the labor market is slowing down and the unemployment rate is increasing, the fact of the matter is, the job market still remains strong for now. We don’t normally see a significant deterioration in the labor market until after a recession has already started.
But there’s a lot of other economic data that came out on Wednesday, as well as earlier this week, that shows that a recession probably is starting, even if it hasn’t showed up in the labor market yet. On Wednesday, the ISM services index was released, and it showed that US services growth cooled, as the price gauge dropped to a four year low. Four years ago was the Covid pandemic where the entire country shut down. It was the last major recession that we had in this country. And this is not the only economic data that you’re going to see that shows that things are as bad as they were during 2020, or at the very least, getting as bad as they were during 2020.
Growth in the US services sector eased in March for the second month in a row, showing a continued decline in the economy. The March figure was lower than all but one estimate in a Bloomberg survey of economists. The services sector declined far more than any economists had predicted, meaning the economy is slowing down much faster than economists are currently predicting. With the decline in March, ISM’s gauge of prices paid by services dipped below the manufacturing input cost measure for the first time since May of 2022. And we all know what happened to the stock market in 2022. Unfortunately with the economic data lining up just like it did in 2022, it’s probably not good for the stock market, which is why we’re most likely starting to see a crash in the stock market as well.
Unfortunately, the slowdown in the economy is coming at the exact same time that inflation is starting to go back up. In fact, inflation has now risen for each of the last four months in a row. And rising inflation is a major problem for the stock market because one of the reasons the stock market has risen so much over the past six months is because the stock market is pricing in the Federal Reserve cutting interest rates. Unfortunately, the Federal Reserve will not be able to cut interest rates if inflation is going up. Powell emphasized the need for more evidence that inflation is easing before cutting rates.
Right now, the stock market is pricing in three rate cuts this year, but as inflation continues to rise, that is looking less and less likely. And that could cause a stock market crash. Now, just because there might be less than three rate cuts this year does not mean they are going to be no rate cuts this year. Powell reiterated that cuts are likely to be appropriate at some point this year. What the stock market now has to reprice is not so much whether or not there will be rate cuts in 2024, but rather how many rate cuts there will be in 2024. The uncertainty about rates has caused some concern in the markets, with stocks falling sharply earlier this week as Treasury yields moved higher.
The ten year Treasury yield has skyrocketed over the past three months, and as yields continue to rise they are quickly approaching the 5% rate that they were at in October of 2023. You might recall how in October of 2023, the Russell 2000 small cap index fell to the lowest level it had been at since October of 2022. So how many rate cuts might the Fed actually do this year? Well, Atlanta Fed President Bostic sees only one rate cut this year, with that rate cut occurring sometime in the fourth quarter. And Steve Cohen says the Fed may have a hard time getting inflation down to its 2% goal. Inflation was falling in late 2023, but there were several upside surprises in that data during the first quarter of this year. That has led to concern among economists and traders that inflation may prove to be “sticky”, above the Fed’s target level, which complicates the path for rate cuts.
Now some people in the comments of prior videos have pointed out that because this is an election year, the Federal Reserve will cut rates in order to boost the economy and help make the chances of President Biden getting re-elected much higher. But Powell actually addressed those concerns during a speech on Wednesday. It’s important to understand that the Federal Reserve is an independent branch of the government. Powell spent some time discussing the Fed’s independence on Wednesday. With the Presidential election campaign heating up, Powell noted the importance of steering clear of political issues. Powell said, “our analysis is free from any personal or political bias.” So Powell is saying that the election is not going to affect their policy. Now, you can believe the Federal Reserve or not. That’s entirely up to you. But that’s what Powell is currently saying. With all of this uncertainty around Fed rate cuts, and with the economy looking like it’s now slowing down and possibly entering a recession, and with that also leading the Federal Reserve to talk about as few as one rate cut this year, all of this is causing the stock market to start to fall.
And this is showing up in investor sentiment. One of the best gauges of investor sentiment is CNN’s Fear and Greed Index. Extreme Greed are points where the stock market is extremely bullish, and going up no matter what the news is. And Extreme Fear are parts where the stock market is extremely bearish, and going down no matter what the news is. And what’s really interesting here is that one month ago, the stock market was in extreme greed at 75 on the index. One week ago that had dropped to greed at only 70. And yesterday that was down to 63. Today it’s down to 62. So what we very clearly see in CNN’s Fear and Greed Index is a continued decline in investor sentiment, getting less and less bullish, and pointing more and more towards a more bearish sentiment.
As investor sentiment becomes less bullish and more bearish, this is going to cause the rally to start to fade, and eventually it will cause the stock market to go down. Market momentum has finally moved out of the Extreme Greed stage that it has been in for the last five months, and has now turned down to the Greed stage as market momentum starts to slow down. Stock price strength has also moved out of Extreme Greed and down to the Greed stage, as the number of companies hitting new 52 week highs has start to decline. And market volatility, as measured by the VIX, has now gone all the way down to Neutral, as more and more options traders are buying put options in order to hedge their portfolio against a possible downturn in the stock market.
Now in a minute, I’m going to go through some earnings data that’s come out over the past two weeks to show you just how much the economy is slowing down, and how this is affecting company earnings, which ultimately is going to affect company stock prices. And in fact, already is. Now even if the stock market does go down, that does not mean that you have to lose money. There are ways of making money as the stock market goes down. One example is this DKNG put that I bought last week, where I made over a 1,000% profit in a single day. It was over a $1,000 profit on this put option. This is a great example of how you can make money as the stock market goes down. If you want to make profits like this in your portfolio, no matter whether the market’s going up or down, you can get all of my trade alerts on my discord. You also get trade alerts from over 20 other full time professional traders. You can get all of our trade alerts in the discord. There’s no reason for you to lose money as the market goes down. Come get our trade alerts and come make money with us in any market environment.
Now in addition to all of the economic data that’s showing a slowdown in the US economy and a possible recession starting, there’s also been a lot of data coming out from company earnings and their most recent delivery numbers and forward guidance that shows companies are expecting a major slowdown in the economy, both in 2024 and 2025. A few days ago, Tesla shares fell after deliveries dropped 8.5% from a year prior. Tesla’s deliveries fell for the first quarter, far below even the most bearish of analyst expectations. How bad do things have to be for even bears to get your delivery numbers wrong? This was Tesla’s first year over year decline in deliveries since 2020, when its operations were disrupted by the global pandemic. Tesla’s deliveries right now are the worst they have been since the 2020 recession, and unfortunately, Tesla isn’t the only company on this list saying that their numbers are just as bad as they were during the 2020 recession.
Intel shares fell after the company revealed a $7 billion operating loss in their Foundry business. And Amazon cut hundreds of jobs in their cloud computing unit. Sales growth in AWS has decelerated in recent quarters, as companies trimmed their cloud spend. Now this is really telling for the technology sector, because it means that not only is Amazon seeing a decline in their revenue and profits, but it’s happening because every other technology company is cutting back on spending as their revenue and profits go down as well. So this is a major problem for the entire technology sector. But it’s not just the technology sector that’s having problems right now.
Let’s take a look at what’s happening in the entertainment sector. PLAY stock, which is Dave and Buster’s, missed both their earnings per share and their revenue guidance. And Darden Restaurants posted their first same-store sales decline since the 2020 pandemic. Here we have the second company posting their worst sales since the 2020 recession. Most notably, lower income consumers pulled back their restaurant spending. In particular, transactions from households making less than $50,000 fell at every one of Darden’s brands. Sales from households making less than $75,000 also declined, and older customers are also being more careful about how much they spend while dining.
The scary part of all of this, is the fact that executives said the company same-store sales and traffic outpaced that of the broader industry. So Darden Restaurants just posted their worst decline in sales since the 2020 pandemic, and they’re saying they’re doing better off than every other restaurant brand out there. Wow. What does that mean for the earnings from all of the other restaurant brands? They must be doing worse than Darden, meaning they’re doing worse than they did when everything was shut down during the 2020 pandemic. Now that’s what’s happening in the entertainment sector.
Let’s take a look at what’s happening in retail. Walgreens topped their quarterly revenue estimates, but lowered their profit outlook, citing a challenging economy. And RH, which is an upscale furniture manufacturer, just missed their expectations on their earnings. RH’s revenue was down 16% from last year. Their net income was down 76% from last year. Their profit margin was down 15% from last year. And their earnings per share was down to $6.42, from $22.47 last year. And RH isn’t the only retail brand struggling with declining sales and profits.
Nike shared a weak sales forecast after mixed Q3 data. Nike announced on its conference call that it anticipates revenue to grow by only 1% in 2024. And after subtracting for inflation, that’s actually a revenue decline for this year. Nike is prudently planning for revenue in the first half of 2025 to be down to single low digits, reflecting a subdued macro outlook around the world. In other words, Nike is expecting a decline in revenue because of the declining world economy and recessions that are happening throughout the world, including in the United States.
And Ulta Beauty shares dropped 14% after they warned of a slowdown in cosmetics growth. Ulta Beauty warned about its outlook for the first quarter after seeing a significant deceleration in growth across the beauty category over the past two months. Ulta’s significant slowdown in growth over the past two months lines up with the significant slowdown in growth that we saw in the ISM services sector part of the economy as well, showing that the overall economy has made a significant slowdown over the past two months, even as inflation has climbed higher. Ulta Beauty said less than a month ago that it expected a moderation in growth after three strong years. However, Ulta Beauty has seen its growth rate come down faster than it anticipated, and this is the story that we’re seeing over and over again.
The economy over the past two months has slowed down significantly faster than economists had predicted, and it has slowed down significantly faster than CEOs and companies had predicted. And all of this is causing companies to lower their forecasts for the year. It’s causing earnings to come in at a miss. It’s causing significant declines in revenue and profits. And all of this is what we saw in the beginning of 2022, right before the stock market fell by over 20%. And all of this is leading a lot of people to believe that the US has started a recession already, and that a major stock market crash is starting once again.
Let me know in the comments below what you think about all of this. Do you think the US economy is entering a recession? Do you perhaps think that we’ve already been in a recession, but it just hasn’t been officially declared yet? And do you think a stock market crash is coming this year? Or perhaps do you think a stock market crash has already started? Let me know in the comments below what you think.