Economic indicator "flashes red light": U.S. stock industrial giants collectively fall into technical correction, Wall Street smells the scent of recession?

Major industrial and transportation stocks in the United States collectively entered a technical correction, as concerns about the ongoing impact of the Middle East conflict on the economy have increased in the market, signaling a warning for the entire U.S. stock market. On Friday, the S&P 500 industrial index fell by 1.3%, with a cumulative decline of nearly 11% from the historical closing high set on March 2nd. Typically, a drop of 10% or more from recent highs is defined as a technical correction. The index briefly fell into correction territory earlier this month, but did not close below that threshold. Max Kettner, Chief Multi-Asset Strategist at HSBC Bank, stated, "Investors' reactions are somewhat rational, as they are assessing which industries face the greatest pressure from rising input costs." He pointed out that the market is also concerned that higher prices will curb consumption and economic growth, thereby dragging down company performance. Among the index constituents, all but one stock have fallen since the beginning of this month. The only one that rose is Emcor Group Inc. (EME.US) with an increase of about 1.1%. Meanwhile, in the latest round of broad-based selling, few sectors in the U.S. stock market have been spared. On Friday, the tech-heavy Nasdaq 100 index also fell into correction territory, as the momentum of large tech stocks that have led the market for most of the past three years rapidly deteriorated. In January and February of this year, industrial stocks surged as investors exited tech stocks and bet on manufacturers benefiting from strong economic growth. However, now, from machinery giant Caterpillar Inc. (CAT.US) to package delivery company FedEx Corporation (FDX.US), these companies considered bellwethers for the overall economy have been hit hard by intense selling, reflecting Wall Street's increasingly dim outlook on the U.S. and global economic prospects. Investors are concerned that soaring energy prices will raise costs, suppress demand in sectors such as construction and freight transportation, and drag down economic growth. High inflation will also limit central bank room for interest rate cuts, which will not only further squeeze consumers but also continue to burden capital-intensive manufacturing companies with high borrowing costs. Airlines with high fuel consumption are highly sensitive to oil prices, and this sector has seen the biggest decline in the industrial index since late February. Consumers rush to buy tickets before rising fuel prices push up airfares, but in the long run, once the economy is hit, travel demand will inevitably suffer. However, the industrial sector has remained positive so far this year. Mark Hackett, Chief Market Strategist at Nationwide, pointed out that this sector's underperformance this month is less than three percentage points below the overall market. "The industrial sector belongs to cyclical industries, and when market worries about the macroeconomic environment intensify, this sector often suffers heavy losses," Hackett said. "Considering the multiple pressures currently facing it, this performance can be considered resilient."