Economist Peter Schiff took to X on Thursday, warning of a potential market crash.

What Happened: Schiff's post highlighted the current market sell-off, the rise of safe-haven currencies like the Japanese yen and Swiss franc, and the fall of commodity currencies.

"Markets are sounding an alarm," he wrote.

"If the #Fed doesn't cut rates soon the #recession may start with a stock market crash."

U.S. stocks closed lower on Wednesday, with the S&P 500 and the Nasdaq Composite recording their worst day since 2022. Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) shares fell 5% on Wednesday despite the company reporting upbeat earnings and sales results for its second quarter. Shares of Tesla Inc. (NASDAQ:TSLA) dipped 12.3% after the company reported weaker-than-expected earnings for its second quarter, while sales topped estimates.

Why It Matters: Schiff's comments come at a time when investors are shifting from large-cap tech stocks to small-cap equities, anticipating a rate cut by the Federal Reserve. The iShares Russell 2000 ETF (NYSE:IWM) has shown its highest two-week outperformance relative to the Nasdaq 100 index since May 2002.

Moreover, mortgage rates have hit their lowest point since February as investors anticipate Fed rate cuts. This anticipation is also reflected in the real estate market, with investors looking for additional offers.

Earlier this month, New York Federal Reserve President John Williams hinted at a potential interest rate cut in the coming months. Williams, who is also the vice-chair of the Fed's rate-setting committee, indicated that a rate cut could be on the cards if the recent slowdown in inflation persists.

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Illustration created using artificial intelligence via MidJourney.

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari