Volatile is certainly an accurate description of the nature of the Stock Market. While highs and lows are always par for the course, this weekend saw an interesting down turn in the market causing investors and analysts alike to take a good long look at the losses.
The New York Times reports that 295,000 jobs were added by employers last month alone, which was over 50,000 more than expected. The dollar also surged last week, which when combined with the sizable increase of jobs, sent the stock market into a spiral. The cause of the alarm? Fear.
Investors and brokers alike fear that a boost to the economic numbers will send a signal to the Federal Reserve to finally raise interest rates that have long been kept at close to zero percent for six years.
Government bonds also fell Friday under the anticipation of higher summer interest rates.
The Standard & Poor’s 500 stock market index fell to its lowest rate since January, while the Dow Jones utility average was done 7.8 percent alone this year.
While some investors are leery that the six year bullish run has come to a halt, other investors see the sharp sell off as an overreaction. Kevin Mahn, chief investment officer of Hennion & Walsh Asset Management, was quoted as saying, “The Fed is not going to raise interest rates from zero to 5 percent overnight.” He went on to remind investors that an increase to the interest rates is a sign that the economy is getting stronger, and that even with an increase, rates are still at a historical low.
While the Friday sell off spree was a hit to the stock market, as a whole it appears that not all investors are ready to dump their stocks and start hiding cash in a mattress.
An interesting poll provided by Gallup.com shows that individuals with sizable investments are more likely to ride out the current stock market upheaval than those who have less of a stake in the game. The sample of investors polled were contacted by the Wells Fargo/Gallup Investor and Retirement Optimism Index survey by phone in an effort to see just how confident investors that had at least $10,000 or more invested into the stock market were in the current market.
The survey showed that over 44 percent of the 1,011 investors polled were “very likely” to ride out the stock market storm, with 46 percent seeing this as a buying opportunity.
Be it a bullish or bearish market, the stock market is always a game of chance.
As recently as January, though, the stock market already had it’s first hit, this time over the uncertainty of Greece’s economy and oil prices seeing a record low. As reported by the Inquisitr, the Dow Jones slipped 300 points while the Euro lapsed to a nine-year low after oil dropped below $50 a barrel and new threats of Greece leaving the union surfaced.
However tomorrow is a new day with new challenges, new insight, and new numbers for investors here in the states and abroad. Time will tell what this market becomes to us in the next year.
[Image courtesy of Fortune.com]