Stock Market Scare

Everyone blames everyone else

 

By Christian Decker

After little over a year of President “Master of Wigs” Trump being in the White House, the stock market was at record highs. Just last week during the State of the Union Address, President Trump boasted large economic gains better than anything the U.S. has ever seen. Democrats and Republicans have gone back and forth as to who is responsible for the supposed resurgence in the economy. Democrats have given former President Barack “Good Luck America” Obama credit. They observe that the majority of economic growth occurred while the during Obama’s fiscal term, and thus, his economic policies were responsible for the change. Meanwhile, the Republican camp has thrown its support behind President Trump, claiming that the Obama policies could not have caused this much economic growth in such a short amount of time. However, despite the constant bickering, the stock market has taken a turn for the worst.

Last Thursday, the DOW Jones closed after a drop of 666 points. Of course, with that number, the Internet had a field day. The next day, the DOW dropped almost 1,100 points. People have been quick to point fingers at the Trump Administration and its economic policies. As we have now entered Trump’s fiscal term, it makes it a lot easier for Democrats and ordinary citizens to blame Republican policies and the Trump Administration. According to sources, the recent drops have been attributed to concerns from various companies about rising inflation due to rising wages, that have ironically seemed to have come from the Republican tax cut, staunch opponents of raising the federal minimum wages to 15 dollars an hour.

President Trump took to Twitter for the millionth time to defend the plummeting stocks. In a stunning display of intelligence, he blamed the DOW Jones stock itself from falling. According to Trump, it’s ruining his great economy. Obviously, this constitutes a complete lack of understanding as to how the market works but staunch supporters of the President will simply not care and flock to defend the “Dear Leader.” This isn’t to say that the Democrats don’t have faults in this situation either. Giving Obama credit for the rising economy, and then when the market tanks, immediately blaming Trump, is giving the Dems a hypocritical image.

Today, the stock market dropped again, this time 1,030 points, a 10% drop from its intraday average, and coming within manual correction range-however it seems to have been going back up to its average after the drops. The NASDAQ also dropped around 200 points, a drop of 3.9% , as well as Amazon, Facebook, and Microsoft stocks, which all dropped 4.5%. According to CNBC, other big stock drops have been happening as well. The worst performing stocks were American Express and Intel, who both closed at 5.4% drops in their stocks. JP Morgan dropped above 4% in its stock points. The S and P 500 stock also dropped 3.75% and broke it’s 100-day average by finishing below 2,600 points, according to CNBC.

Despite the lows, investment strategists are optimistic about the future of the market. Kate Warne, an investment strategist from Edward Jones, says “that right now the market is concerned about high interest rates”, according to CNBC. She also says that “underlying fundamentals are going to drive stocks higher, but I think the path higher is going to be more volatile than it has been in the past years.”

The uncertainty of the stock market grows even stronger, however. With the big company stocks fluctuating from extremely low to high values,it would seem to potential investors that now might not be the best time to start investing in stocks. Jack Ablin, a chief investment officer at Cresset Wealth Advisors, attempts to reassure potential investors, however. He says that this trend of lower gains is purely technical, according to CNBC. According to Ablin, “Market valuations are expensive and need to correct. At the same time, credit conditions remain robust as the availability of money to borrow, spend and invest is strong.”

Many corporate investors are optimistic because of the new tax reform put in place by the Republicans recently and hopefully to see higher gains. While this may be extraordinarily good for the companies that stand to benefit, it remains to be seen what effect that this will have on the average American investor and workers. Whatever the case, the stock market still appears to be functioning and no crash has happened as of yet.

 

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