Stock Market Gyrations Make You Dizzy? Get used to it, analysts say: NPR
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The stock market has left many investors struggling to breathe.
Only on Wednesday did the Dow Jones Industrial Average reach a record of 1,086 points after beating 653 points on Christmas Eve. And it was many more days when the markets fluctuated hundreds of points. In general, 2018 was an unusually bumpy year for markets.
And the gyrations are not likely to end anytime soon, says Lawrence White, finance professor at New York University's Stern School of Business.
"It really feels like this is a buckle-seat belt, we have a turbulence going forward," he says. "The markets are always trying to predict what will happen in the future, and I think much of the turmoil is this concern for future turbulence . "
The US economy had good growth and low unemployment in 2018, but the stock market has had the worst performance since 2008, the height of the major recession.
Although Dow and S & P 500 each achieved about 1 percent on Monday, all the major indices closed the year down sharply, while Dow is 5.6 percent lower, while the S&P 500 index fell by 6.2 percent. 19659008] What happened? Signs of trouble only arose during the year, with a report from the Ministry of Labor showing that wage growth finally picked up, says Quincy Krosby, Marketing Director of Prudential.
"You'd think this would be good for the market "she say But higher wages can hurt corporate profits and send a signal to the Federal Reserve that higher inflation is coming.
The Fed had raised interest rates slowly for two years, but the strong numbers suggested it could continue to do so – and at a faster rate than before. Fed Mayor Jerome Powell adds these fears in October with comments suggesting more hikes are coming.
Stocks have been particularly volatile over the past three months of 2018, with some of the major technology companies like Apple and Facebook down more than 20 percent.
President Trump has made the turmoil worse, says NYUs White. "I think the administration has become even more erratic in both its statements and actions," White says.
Trump has repeatedly attacked the Fed to raise interest rates and has criticized Powell, whom he appointed for his job.
"I put him in, and so far I am disappointed," Trump said in an interview in October on 60 minutes . "Maybe one day I think he's the biggest, but right now I'm very disappointed."
At the same time, the trump management's aggressive efforts to revise US trade policy have only contributed to investor fear.
The ongoing wage war with especially Beijing raises questions about the near-term performance of the economy, because many US companies are doing significant business in China or relying on supply chains to build and sell products.
Technological giants such as Apple, Google and Facebook, which account for an increasing share of the stock market's daily trading volume, have been particularly hard hit by the market fall.
Concern is not & # 39; t just about trading; Technical giants are also facing an increasing risk of public regulation. For example, Facebook has suffered a major PR outcome among revelations that customers' personal data was used by the political research firm Cambridge Analytica.
All this volatility in the market causes headaches for investors, especially those trying to get a handle on the retirement account.
Barbara Egeler-Bailey has been caught in the turmoil.
After her parents died, she spent a lot of time fixing up their house near Grand Rapids, Mich., Who intends to sell it and use the proceeds to fund the pension.
After the sale went through in September, Egeler-Bailey invested part of the money in a mutual fund that invested in medium-sized shares. It was a decision she came to regret.
"After the stock market began to go up and down like a roller coaster, I saw that my fund had only fallen as much as 20 percent, dramatically, just since the fall," she says.