The student news site of Pleasant Valley High School

Spartan Shield

The student news site of Pleasant Valley High School

Spartan Shield

The student news site of Pleasant Valley High School

Spartan Shield

Why should I care about the stock market plummet?

After nearly a year of near continuous growth under the new presidency, the stock market plunged this past Monday. The Standard and Poor (S&P) fell by nearly four percent, erasing its gains made in the Trump era. Such a fall off was the worst experienced since 2011. The Dow Jones plummeted as well, recording its biggest drop ever at over 1,000 points. The last drop of this magnitude occurred in 2008 on the eve of the financial crisis.

According to market analysts, the stock market has entered a period of “correction,” a somewhat arbitrary term that describes a drop of over 10 percent in the stock market.  

Such a fall this time, however, is not indicative of such dire economic circumstances. Over 10 corrections have happened in the past 20 years, and only two of those corrections led to further economic downturn.

While the drop was volatile, such fluctuations are normal in most markets, as Noah Weisberger, a manager at AB Bernstein, explains.

“It’s disquieting, it feels terrible, it’s eye-popping when you look at the screen, but it doesn’t yet tell you that something is broken,” he said. “It’s certainly a change in behavior relative to 2017, but then again, 2017 is an anomalous period with incredibly low volatility in the market, a very smooth glide-path higher.”

Such a downturn after relative stability tends to provoke nervousness in investors. However, while such nervousness causes further drops in the market as investors continue to sell stocks, experts are confident that the fall off will not lead to recession. “When the nervousness hit, a lot of people who were thinking of quitting hit the exits,” said Bruce McCain, chief investment strategist at Key Private Bank. “A lot of people want to let it settle out a bit and really make sure the worst has past … [but] for our standpoint on where we’ll be over the next year: We see no signs of recession.”

After a year of tranquility, it appears that the markets are returning to the median. Such a drop, while not an enormous cause for concern, signifies that last year’s trend was not the new normal. As the rest of the year continues, investors will continue to carefully watch the market in this new period of volatility.

Leave a Comment
Donate to Spartan Shield
$480
$1000
Contributed
Our Goal

Your donation will support the student journalists of Pleasant Valley High School in Bettendorf, Iowa. Your contribution will allow us to purchase needed equipment and cover our annual website hosting costs.

More to Discover
About the Contributor
Justin English, Staff Contributor
My name is Justin English and I am a senior at Pleasant Valley High School and a staff contributor for the Spartan Shield. Outside of school, I row for the Quad City Rowing association which takes up most of my time. Next year I will continue to row in college but have no idea as to what I want to study.
Donate to Spartan Shield
$480
$1000
Contributed
Our Goal

Comments (0)

All Spartan Shield Picks Reader Picks Sort: Newest

Your email address will not be published. Required fields are marked *

Activate Search
Why should I care about the stock market plummet?