By Selina Stoller, Summit Consumer Receivables Acquisitions, LLC ***
This week’s market volatility has been a rollercoaster for investors.
On Monday, the Dow & S&P had a rough day with the Dow plunging 600 points – the worst since January 3 of this year. The same day, China increased duties on $60 billion of U.S. goods, largely agricultural, in retaliation to higher tariffs imposed on Chinese imports last week by the White House.
Tuesday’s close of business brought a brighter sunset for Wall Street. U.S. stocks climbed and clawed back a chunk of their Monday losses. The Dow Jones Industrial Average recovered nearly 1/3 of its plunge and rose 207.06 points. Tuesday’s rally came after morning tweets from President Trump on Twitter announcing the U.S. would raise tariffs on Chinese goods.
Right now, investors are looking for some market equilibrium or better yet, some perspective.
On the heels of a good first-quarter GDP reading and the lowest unemployment rate in almost 50 years investors were “giddy.” Then trade deals with China hit a snag and shook up Wall Street.
So what should investors do when faced with an unpredictable market and a possible extended “trade war?”
Some experts think there might be some more downturn as the market tries to determine how long tariff talks will be on the table. In the short term, economists estimate additional tariffs might eliminate the benefits of tax reform and slow GDP by half-percent annually. On the other hand, times like these present chances to buy shares of great companies at a discount.
The key right now is to not be in a hurry! Market sell-offs create opportunity. When and if traders/investors start running, be patient and keep perspective. Over the long term, stocks have returned high single-digit returns on average since the data became available in the early 1900s.
Overall, the market is holding up well. So far this week, the S&P 500 index is down 1.6 percent but is up 13 percent so far on the year.
- 16 May, 2019
- Josh Smith