S&P 500, Dollar Index Decline Together For 1st Time Since 2008 Financial Crisis

Financial markets are experiencing a rare simultaneous downturn of the S&P 500 tracked by SPDR S&P 500 SPY and the U.S. Dollar Index, echoing patterns last seen during the 2008 financial crisis. Recent data reveals a parallel decline that has sparked investor attention and raised questions about economic stability.

What Happened: In December 2024, the S&P 500 Index stood at 5,881 before dropping to 5,767 by Mar. 24, representing a 1.93% decline. Simultaneously, the dollar index fell from 108 to 104, a 3.70% reduction.

This synchronized retreat mirrors a similar occurrence in 2008, when the S&P 500 declined 9.94% and the dollar index dropped 7.61% between December 2007 and March 2008.

The current market landscape is characterized by growing recession concerns. Goldman Sachs has increased its recession likelihood forecast from 15% to 20%, while a Bank of America survey indicates that 55% of fund managers perceive a global recession as a primary market risk.

Why It Matters: Economic indicators present a mixed picture. The Chicago Fed National Activity Index rose to 0.18 in February from -0.08 in January, and the S&P Global Services PMI climbed to 54.3 in March from 51 in February. However, the manufacturing PMI declined to 49.8, signaling potential economic challenges.

Investor sentiment remains cautious, with the CNN Money Fear and Greed Index moving to the “Fear” zone at 27.9, reflecting underlying market uncertainty.

Economists like David Rosenberg warn that a recession could materialize as early as July, pointing to factors such as increased household debt and struggling small- and mid-cap stocks.

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