The connection between a recession and the stock markets

Question

You always hear the connection between recessions and stock markets. I understand a recession would trigger the stock market to plunge. But I don’t understand why and I also don’t understand the timeline of events of a recession and what’s happening with the U.S. economy overall during a recession.

In: Economics

Answer 1

Recessions often lead to stock market declines because economic downturns can reduce corporate profits and consumer spending. Investors typically react to these predictions, which can drive market fluctuations.