The stock market registered a considerable drop at a global level and these are the reasons, according to experts: What to do if you have investments?
The working week began with a considerable drop in the stock market, which sparked the concern of investors and economists worldwide.
The selective Standard & Poor’s 500 index, known as the S&P 500, closed Monday down 160 points (3%) at 5,186, the biggest drop in two years, according to FactSet figures. The Nasdaq Market Composite Index, which encompasses major technology companies, fell 4.3%.
The drop in the stock market comes after a bullish year, in which the stock market reached record highs following a slowdown in inflation in the U.S. economy, the result of a steady rise in interest rates by the Federal Reserve (Fed). However, the outlook is now different and markets fear a possible recession.
These are the reasons for the stock market fall, according to experts
According to experts, the fall in the stock market in the United States is due to four main reasons:
No interest rate cuts : The Federal Reserve has not made any interest rate cuts since 2020, suggesting an increased risk of error on monetary policy issues.
U.S. slowdown? : A slump in manufacturing, lack of interest rate cuts, a weak employment report and a decline in the consumer spending index point to a possible U.S. economic slowdown.
High expectations in technology stocks: Despite the strong performance in technology stocks in recent weeks, the gains are not enough to offset the price appreciation in investors.
Rising interest rates in Japan: Rising interest rates in Japan have led traders to sell their assets to cover operating expenses, which has fueled the fall in the stock market.
What to do if you have investments?
According to a report by Oxford Economics, declines in stocks are common and tend to happen on average every year and a half to every two years, so they should not be a cause for panic or concern. Experts at Charles Schwab recommend not falling into the impulse to sell stocks as this could lead investors to miss opportunities, especially if investments are planned for the long term.