The stock market has experienced significant gyrations in recent weeks, leaving investors worried about their portfolios and the possibility of a recession. President Trump’s tariff threats have added to the uncertainty. Market commentators are divided, with some advising investors not to worry and others predicting a crash or recession.
The Dow Jones Industrial Average fell 890 points on March 10, and the S&P 500 entered “correction” territory on Thursday. However, Friday brought a relief rally, with the Dow rising 674.62 points. The swings highlight the inadequacy of tracking the market by short-term moves.
Historically, staying strong during periods of volatility has been sound advice, although it works better for those with more distant horizons.
Investor anxiety amid market volatility
President Trump’s Treasury Secretary, Scott Bessent, faced criticism on “Meet the Press” for saying market corrections are normal.
His view was consistent with Wall Street orthodoxy, but his implication that “euphoric markets” always lead to financial crises is questionable. Stock prices aren’t relevant to most people’s lives, so the focus on markets is puzzling. It’s dangerous to attribute stock market moves solely to news developments, especially with President Trump’s tendency to announce policies that don’t get implemented.
The future is uncertain, and some believe Trump’s policies will affect economic growth. Businesses may “wait it out” until the policies become clearer. The stock market gauges future expectations, but it’s unclear how far ahead it looks.
Investors have different goals and risk tolerances, so while the volatility may seem alarming, maintaining perspective and considering long-term objectives is crucial.
