Your anxiety might be moving up and down as you observe the wild swings of the Stock Market, but a couple of economists caution against panic.
Creighton University Economist Ernie Goss says October historically is a volatile month, with rising interest rates and trade tensions adding to it.
“All three indices, the major indices, are up for the year. So, it’s not a time to be jumping ship, but it certainly is a time to be more concerned,” Goss tells Nebraska Radio Network.
The Dow Jones Industrial Average was heading toward 27,000 before it began a slide with some days seeing huge losses. The Dow closed 125.98 points lower Tuesday to settle at 25,191.43. The Dow at one point Tuesday had fallen more than 500 points.
The S&P 500 fell 0.55% to close at 2,740.69. It was the S&P’s fifth straight decline.
The Nasdaq Composite closed 0.4% lower at 7,437.54.
The Stock Market has been the investment of choice for many years now. Goss says the Federal Reserve’s move to increase short-term interest rates and sell bonds, which tends to raise long-term interest rates, has caused some investors to shift their money to other investments.
Goss says the markets have been overheated by the Fed’s low-interest rate policy adopted as the country reeled from the recession of 2008-2009. He says the volatility continuing for a while.
University of Nebraska-Lincoln Economist Eric Thompson says the rate of economic growth is moderating. He advises to focus on the percentage drop, rather than the raw numbers.
“I don’t know that there’s any particularly strong reason to be worried right now, but that risk is out there. At some point we will see a sustained contraction in the Stock Market,” Thompson tells Nebraska Radio Network.
Thompson says the Stock Market reflects the expectations for the economy and when those aren’t met, it drops. Thompson says the rate of economic growth is moderating, which is reflected in the Stock Market.
Both economists say the Stock Market continues to be a good investment in the long run.
CNBC reported stocks fell on Tuesday as corporate results from Caterpillar and 3M disappointed investors, but they recovered as investors rotated to other stocks.
AUDIO: Brent Martin reports [:50]