Why has the Dow plunged more than 1000 points? Should I wait for stocks to go down? Here’s what some pros think.

What a difference a day makes.

Fresh off the top earning percentage for the Dow Jones Industrial Average DJIA,
-0.30%
since November 9, 2020, the blue chip index has been battered, along with the rest of the stock market, including the S&P 500 SPX,
-0.57%
and the Nasdaq Composite COMP,
-1.40%.

Even US Treasuries were not safe, with the TMUBMUSD10Y 10-Year Treasury Bond,
3.127%
climb above 3% as prices fall.

Some pundits attributed Wednesday’s rally to a statement by Federal Reserve Chairman Jerome Powell that a 75 basis point hike was not being actively considered by central bank policymakers in upcoming meetings.

The remark came after the Fed on Wednesday announced the first half-percentage point interest rate hike, as expected since 2000, in the final months of President Bill Clinton’s second term.

The Fed raised rates to combat a spike in inflation that materialized in the wake of COVID-19 shutdowns and dislocations, and which was exacerbated by the bloody conflict in Ukraine following the invasion of the Russia at the end of February.

Some industry watchers attribute Thursday’s selloff in part to concerns that inflation will continue to weigh on the economy in the United States and elsewhere around the world.

Thursday’s data showed the productivity of American workers and businesses fell at an annual rate of 7.5% in the first quarter, marking the biggest drop since 1947, amid supply shortages and bottlenecks. strangulation of production.

“This was a setback to our Roaring 2020 scenario of a technology-led productivity growth boom offsetting chronic labor shortages,” according to Yardeni Research, a global investment strategy provider founded by Ed Yardeni, a MarketWatch contributor.

Meanwhile, Greg Bassuk, CEO of AXS Investments in New York, said the day’s action reflected “a continuation of 2022’s roller coaster of high market volatility, with this session’s sharp downward spiral erasing yesterday’s earnings.

Bassuk told MarketWatch that “investors are selling today on renewed concerns about the plethora of lingering uncertainties.”

AXS CEO pointed to tensions with China, Russia’s seat in Ukraine, as well as a mix of corporate earnings and lingering concerns over COVID-19 hampering a more powerful recovery in some parts of the world .

To see: China-focused ETFs sink as Blinken reportedly intends to claim China is US’ main rival

Recession fears and inflation worries have been the centerpiece of the current bearish episode on Wall Street. “There is no doubt that inflation, rising rates and volatility will continue to characterize the market environment in [the second quarter] and beyond,” Bassuk said.

“What’s really interesting about these markets is that there are these shifts every other day back and forth where investors are outrageously bullish or outrageously bearish the next day,” said Sylvia Jablonski, managing director and director. investments in Defiance ETFs in New York.

Indeed, MarketWatch’s Bill Watts wrote that with the exception of 2020, the S&P 500 has already exceeded or is on track to exceed annual movement totals of 2% or more for every year dating back to 2011.

Lily: Four months rough for stocks: The S&P 500 is off to the worst start to a year since 1939. Here’s what the pros say you should do now.

Jablonski said there was still room for hope.

“Inflation may have peaked, growth is slowing, but it’s still positive. The consumer continues to spend, [and] employment is at record highs,” she said, pointing to the $2 trillion in excess savings believed to have been amassed during the pandemic.

Market Extra (July 2021): American wealth has increased by $19 trillion during the pandemic – but especially for the very rich

The volatile state of the market is fueling confusion about the outlook. Is it time to jump into equities or should investors wait for a better entry point? Or should we take the advice of billionaire investor Paul Tudor Jones and stay away from traditional markets?

History suggests that you can’t time the market, and over a long period the market wins. The big question is what is your schedule, what is your pain tolerance?

Falling bonds, with yields rising as prices fall, are complicating matters for some investors. Treasuries, including the benchmark 10-year U.S. government bond TMUBMUSD10Y,
3.127%,
are traditionally seen as a safe haven in times of uncertainty, but have also been canceled given the Fed’s current rate-hike plan, which has led to bond selling in hopes of richer returns to come.

Read also : “The long bond bull market is over,” says Guggenheim’s Scott Minerd

And see: Dollar soars as gloomy Bank of England economic forecast gives investors reason to sell Treasuries and stocks

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