By Joseph Young
- Dow Futures crashed by 455 points at their lowest point as conflict with Iran intensifies.
- The U.S. stock market is vulnerable to a big correction, especially with markets reacting negatively after a liquidity injection.
- Even a rate cut in 2020 may further slow the equities market.
After reports of Iran firing missiles targeting U.S. troops in Iraq, Dow futures crashed by 455 points. The steep drop in the U.S. futures market comes after the Fed injected new liquidity into markets on Jan. 7.
Relaxed financial conditions triggered by the expansion of the repo market have been attributed as the major driving factor of the recent stock market rally. And even fresh liquidity has not been able to stop the Dow Jones pullback.