A global stock market crash

The U.S. and global stock markets fell for a sixth straight week this past week as the threat of a U.S. recession intensified investor concerns, coupled with factors such as the pandemic and the ongoing conflict between Russia and Ukraine.

The FTSE All-World index is on its longest weekly losing streak since mid-2008, matching the period before the subprime mortgage crisis led to the catastrophic collapse of Lehman Brothers. The index fell 2.2% for the week, while the U.S. benchmark S&P 500 lost 2.4% and the tech-heavy Nasdaq Composite lost 2.8%.

Efforts by the Federal Reserve to raise interest rates to fight inflation have weighed on stocks since the start of the year. Yields on the 10-year Treasury have nearly doubled so far this year, reducing the relative attractiveness of riskier assets such as stocks and weighing on valuations for corporate bonds.

Even those sectors that would normally benefit from higher interest rates are under pressure. The S&P 500 financial sector index fell 3.6% for the week. Many investors believe an increase in loan defaults during a recession will more than offset an increase in bank profit margins.

However, interest rate hikes have not effectively curbed inflation so far. April CPI data showed little or no slowdown in U.S. inflation, adding to concerns that the Federal Reserve may not be able to achieve its goal of slowing inflation while avoiding economic contraction.