Will stocks keep going down? Wall Street braces for another punishing week after losing streak

Last week the markets got hammered and, as of the time of this writing, the S&P, Nasdaq, and Dow futures are all down around 2% in pre-market trading. That suggests investors are anticipating another potentially rough week for stocks. But what’s causing this uncertainty and trepidation? Most experts say it comes down to three factors:

Inflation: Earlier this year, inflation hit a 40-year high in the United States, sending prices of common items soaring. For example, NBC News reported that gas prices are now 48% more expensive year over year. It’s possible inflation will continue to climb in 2022, which will cause the Fed to raise interest rates to combat it, which is spooking investors that such measures will slow economic growth, reports The Wall Street Journal. If growth falls, stocks usually fall, too.
China’s COVID-19 lockdowns: China is another concern weighing on the markets. Early in the pandemic, China was able to control outbreaks relatively well compared to other countries, resulting in far fewer cases. But now China is being hit hard by COVID-19, and its zero-COVID policy means the government is willing to shut down entire cities for weeks–denting production in the world’s manufacturing breadbasket, reports MorningStar. A slowdown in Chinese manufacturing could lead to a slowdown in global manufacturing.
The war in Ukraine: This is probably the factor with the most uncertainty. The war in Ukraine is still raging, and there’s no consensus on how far Putin will take things. The fear is that other countries will be dragged into a war with Russia if things spiral out of control. If that happens, military conflict could lead to economic chaos. But even if not, Russia’s war with Ukraine is already leading to energy uncertainty as more and more countries weigh shunning Russian gas completely, reports Reuters.

Until some of these uncertainties are resolved–and that may take a while–most experts say it’s likely the markets will continue to show volatility, which means they could be in for a bumpy ride for the foreseeable future.