What is the impact of a recession on the stock market?

What is the impact of a recession on the stock market?

A recession typically leads to decreased consumer spending and business investment, which can negatively affect stock prices.

Can you explain why stock prices drop during a recession?

During a recession, companies often report lower earnings, leading investors to sell stocks, which drives prices down.

Are there any stocks that tend to perform well during a recession?

Yes, defensive stocks, such as those in utilities and consumer staples, often perform better as they provide essential services.

How long does it usually take for the stock market to recover after a recession?

Recovery times can vary, but historically, it can take several months to a few years for the stock market to fully recover.

What strategies can investors use during a recession?

Investors might consider diversifying their portfolios, focusing on defensive stocks, or even looking for undervalued assets.