Stock market today: Plunge worries investors, but experts say don't panic
CHICAGO (WLS) -- Waking up to news of a large stock market drop rattled many investors in Chicago and beyond, but those with experience in the field say it's not a reason to panic for most.
"When the stock market goes up it takes the stairs, and when it goes down it jumps out the window, and today we've jumped out the window from a pretty high floor because we've been going up a lot of stairs" said JJ Kinahan of IG North America and TastyTrade.
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Nearly everything on Wall Street tumbled as fear about a slowing U.S. economy worsened and set off another sell-off for financial markets around the world.
The S&P 500 dropped 3% for its worst day in nearly two years. The Dow Jones Industrial Average reeled by 1,033 points, or 2.6%, while the Nasdaq composite slid 3.4%.
The drops were the latest in a global sell-off that began last week. Japan's Nikkei 225 helped begin Monday by plunging 12.4% for its worst day since the Black Monday crash of 1987.
At TastyTrade in the West Loop, they fielded calls all day from worried investors. Kinahan said the market movement started Friday, with evidence of a slowing economy and a slow down in U.S. hiring, plus a rate increase in Japan that led to market volatility.
He urged against making big moves and said to instead use this as an opportunity to evaluate and educate yourself on any investments you have, like your retirement.
"I would expect the next week or so to be really bumpy and, again, try not to get too high or too low during it because we are trying to see what's the new equilibrium of where prices should be," he advised.
At Morningstar Wealth in the Loop, Chief Investment Officer Philip Straehi said the advantage to this volatile market is lower interest rates, which could actually help people looking to borrow money.
"If you are a homeowner, if you are financing car payments over the next few months, you can see that come through and give you an opportunity to refinance, so in terms of borrowing costs it's actually good news," he said.
Of course, the U.S. economy is still growing, the U.S. stock market is still up a healthy amount for the year and a recession is far from a certainty. The Fed has been clear about the tightrope it began walking when it started hiking rates sharply in March 2022: Being too aggressive would choke the economy, but going too soft would give inflation more oxygen and hurt everyone.
Goldman Sachs economist David Mericle sees a higher chance of a recession within the next 12 months following Friday's jobs report. But he still sees only a 25% probability of that, up from 15%, in part "because the data look fine overall" and he does not "see major financial imbalances."
Some of Wall Street's recent declines may simply be air coming out of a stock market that romped to dozens of all-time highs this year, in part on a frenzy around artificial-intelligence technology. Critics have been saying for a while that the stock market looked expensive after prices rose faster than corporate profits.
The Associated Press contributed to this report.
