Major US Stock Indexes Drop: Wait for it (Part 2)

The stock market didn’t get tested – you did,” the title of an article I read this morning I believe to be a rather accurate description of the financial industry over the past few days.

After a week with an almost 8% decline in the S&P 500 and the largest point drop in any one day EVER, investors certainly feel tested.   Though it is human nature to ask “why” – and if ever an event like the recent U.S. stock market activity could warrant us to analyze and theorize as to why – these questions may never be answered.

If we are to theorize, however, perhaps markets increased so much that traders began taking profits on the news of potentially 3 more interest rate hikes this year and impending inflation.  Then the computers kicked in, adding their 2 cents, or rather 2,000 cents?

Theories aside, expect more volatility today as the futures are down 800 to 1000 points, meaning the opening bell could produce an 800 to 1000 point drop at the clang of the bell.

Some food for thought:

  • With this decline, we are still at Dec 2017 levels
  • All of the good I wrote about yesterday still exists – more jobs, higher pay, solid earnings, and an uptick in manufacturing and housing
  • This sharp decline may change the outlook of the Federal Reserve to raise interest rates as much as they were originally inclined

If you’re an MFC client, we’ve been watching the markets and spent most of the month of January re-balancing portfolios.  This means we took profits and also shifted the rest of the stock allocations. Rest assured, we are watching the news, continuing to formulate strategies. If you would like a phone call to talk over your specific situation, please let us know.


Respectfully submitted,

Kyra H. Morris, CFP®