1. World Bank cuts global growth forecast to 2.3% for 2025. 2. U.S. growth projection reduced to 1.4%, down 0.9 percentage points. 3. Trade uncertainty impacts global economic outlook significantly. 4. Long-term trade agreements could improve growth by 0.2 percentage points. 5. OECD also expects global growth to slow due to trade concerns.
The downward revision of growth forecasts typically signals economic slowdown, affecting investor sentiment negatively, as seen in previous downturns like 2008 when reduced forecasts led to significant declines in equity markets including the S&P 500.
Given the significance of global economic health and the trade relations impacting major U.S. companies in the S&P 500, these revisions greatly influence market expectations and valuations.
The impact of lowered growth forecasts is generally felt quickly in stock markets due to immediate investor reactions to economic indicators.