Chaos has wreaked havoc across the stock market floor as investors and corporations have begun to panic over the recent volatility in shares, raising questions as to the origins of the sudden free-fall after months of record-breaking highs.
Economists say that a correction was expected after the meteoric rise in the Dow Jones, which soared over 700 points within the past two weeks, but didn’t expect this much turbulence on its way back down to Earth. The Dow is a market index made up of 30 of America’s large public companies. It is designed to reflect the overall health of America’s multinational corporations, along with the growing employment rate. Although the Dow is comprised of well-established and successful corporations, their stocks still fluctuate and are unpredictable at best, which ultimately makes playing the stock market a high stakes game of poker through gut feelings and luck.
An increase in wages and the prospect of high interest rates spooked many investors, igniting the opportunity for shareholders to bail on their heavily invest stock in order to cash in big and propelling them to sky high value. It just so happened that everyone did it at the exact same time, all while new Federal Reserve chairman Jerome Powell was simultaneously being sworn in.
Not only did U.S. markets suffer, but markets from Europe and Asia also took a beating after seeing as much as $4 trillion in total stock values evaporate.
The main concern for Americans is the heightened risk of investing in their 401k and retirement accounts after seeing the market plummet below sea level. Not only for the common worker, but for the younger generation in particular, specifically students. Saving money is hard enough at a young age while attending college nonetheless. However, experts also say that this dramatic decline will not impact the economic climate in the near future. Considering the unemployment rate is 4.1 percent, according to NBC News, and hourly wages are up 2.9 percent, the best advice is to not panic. Although it may seem grim, the numbers don’t lie. The economy has sustained a long enough track record for people to believe that the stock market will replenish and recover faster and stronger than ever before. With that being said, financial gurus stress the importance of investing once the dust settles and being willing to endure the ebbs and flows of the unpredictable stock market. The message for students: save your money, invest in the green, and be prepared.