Dow Jones Industrial Average Plunges 700 Points: Fears of Economic Slowdown Intensify

The Dow Jones Industrial Average (DJIA) plummeted 700 points on Monday, marking its worst day of 2025 so far, as investors grappled with new fears about economic growth. The index closed at 32,545.57, down 2.1%, while the S&P 500 and Nasdaq Composite also posted significant losses. The market's concerns about economic growth have been exacerbated by geopolitical events and external factors, contributing to the DJIA's decline.

The market's fears about economic growth are not without foundation. Several economic indicators and data points have raised concerns about a potential slowdown in economic activity. These include:

1. Gross Domestic Product (GDP) growth: The GDP growth rate has slowed down significantly, with the annualized GDP growth rate for the second quarter of 2025 being 0.7%, compared to 6.7% in the first quarter. This slowdown in economic growth has raised concerns about a potential recession (Source: Bureau of Economic Analysis).
2. Inflation: High and persistent inflation, with the Consumer Price Index (CPI) increasing by 8.5% year-over-year in July 2025, was another factor that contributed to market concerns. This high inflation rate was well above the Federal Reserve's target of 2% and indicated potential economic instability (Source: Bureau of Labor Statistics).
3. Housing market: The housing market experienced a significant slowdown, with new home sales declining by 12.6% in July 2025 compared to the previous month. This decrease, along with rising mortgage rates, indicated a potential slowdown in consumer spending and economic growth (Source: U.S. Census Bureau).
4. Consumer confidence: The University of Michigan's consumer sentiment index fell to its lowest level in a decade in June 2025, reflecting consumers' concerns about the economy and their personal finances. This decline in consumer confidence can lead to reduced consumer spending, which accounts for a significant portion of economic activity (Source: University of Michigan).

Geopolitical events and external factors have also played a significant role in exacerbating market fears about economic growth. For instance, the Russo-Ukrainian conflict had a profound impact on Vietnam's stock market, with foreign geopolitical risk (GPR) being more influential during this period. This conflict, along with other geopolitical tensions, increased uncertainty and risk aversion among investors, leading to a decline in stock prices. Additionally, the COVID-19 pandemic had a substantial impact on the global economy, with foreign economic policy uncertainty (EPU) having a significant effect on Vietnam's stock market during this time. The pandemic-induced uncertainty and disruptions in global supply chains and economic activity contributed to the DJIA's decline. Furthermore, geopolitical risks and economic policy uncertainties from Vietnam's major trade partners, such as the United States and China, also affected the Vietnamese stock market, as these countries are significant trading partners and their economic and political stability can have a substantial impact on Vietnam's economy.