The Dow Jones Industrial Average plunged nearly 1,200 points Monday, the largest single-day point drop on record. That performance came on the heels of the Dow falling 665.75 on Friday, and extended into international markets Tuesday. Despite the alarming nose-dive, advisers are calling the stock market decline a ‘price correction’ after a nearly nonstop upward climb since President Donald Trump took office.
Why did the stock market take the plunge?
There are two primary reasons for the stock market decline:
- Fear of inflation due to higher wages, lower taxes and increased spending
- And the expectation that interest rates are set to skyrocket
On the show today, Glenn broke down the how’s and why’s of the Dow’s recent dramatic drop and explains why he thinks there are reasons why we can all relax. Watch the clip above to see more.
What should you do about it?
According to financial advisers, the answer right now is: nothing. Just stay calm and carry on for the long-term — oh, and hang on tight, because it could be a rollercoaster-of-a-ride.
“This is something that is attention getting, but not yet something you should react to,” Certified Financial Planner, Ken Moraif, told CNN.
“Don’t be scared, and don’t be impulsive. Be disciplined no matter what the market environment, and keep saving and investing according to your long-term plan,” advised Kristina Hooper, chief global market strategist at Invesco.
“Let’s look at the big picture — the economy is improving, more people are working, they’re seeing more money in their paychecks, and tax reform will boost the bottom line of businesses and households. If the market is falling, that means it’s now on sale, ” said Greg McBride, Bankrate.com’s chief financial analyst.
UPDATE: The Dow closed up 567 points today, Tuesday Feb. 6.