Concerns about recession have heightened expectations for interest rate cuts by the Federal Reserve, leaving U.S. stock markets uncertain about whether to celebrate or mourn.

U.S. stock markets faced a sell-off on Thursday, with the Dow Jones Industrial Average set to experience its worst day of the year. The Dow dropped over 1.6%, the S&P 500 fell by more than 2%, and the Nasdaq slid more than 3%. Recent data has sparked concerns among investors about a potential recession, as well as the belief that it may be too late for the Federal Reserve to initiate interest rate cuts. Last week, new jobless claims in the U.S. recorded the largest increase since August 2023. Additionally, the ISM Manufacturing Index, which gauges U.S. factory activity, registered at 46.8%, below expectations and indicative of an economic contraction. Chris Rupkey, chief economist at FWDBONDS, remarked, “Today’s economic data continues to show a downward trend, which is concerning, even if it is not technically a recession.” He noted that the stock market is uncertain about whether to rejoice or lament, as the Federal Reserve may cut rates three times this year, while the winds of economic decline are intensifying. Companies that could be severely impacted by a recession saw significant drops, with JPMorgan (JPM.N) down nearly 3% and Boeing (BA.N) falling over 7%. Even major tech stocks, such as Nvidia, felt the strain, experiencing an 8% decline, as the approach of the U.S. presidential election in November may lead to increased market volatility, prompting investors to liquidate some positions.