Stock Market Performance
This Article On Stock Market Performance Was Written By Gustan Cho
At the beginning of the recession in 2008, the stock market experienced a major drop in one day, 777.68 points in one day. We all remember the results of that, job loss, credit tightened, the housing market was significantly impacted. So what about 2016 and the stock market performance? Are we seeing signs that we are headed for another economic downturn?
Stock Market Swings
It is not abnormal for market performance have periods in which it experiences large losses as a result of large selloff’s, but remember it is usually followed by large rallies. For instance, January and February had some very poor stock market performance, but by mid-March there were again great rebounds. So what about June 24, 2016 stock market drop of 610 points? Well let’s explore that for a minute. Most investors knew that yesterday’s stock market performance would be poor and it was not unexpected. If you wake up early and watch the news, it was one of the first things that was discussed on the national news before the market even opened for trading. With the announcement of the UK exiting the EU, the global markets tumbled significantly the night before. This was not unexpected but it is important to keep it into perspective. Investment advisors believe that we will likely continue to see some uncertainty and some sharp market declines over the next few months, the risk of another recession is relatively low.
Jobs Reports And Stock Market Performance
May jobs report was weaker than expected and that is typically what I pay attention to. If you have a weak job market and a sharply declining stock market, I take notice quickly. However, May’s unemployment rate was reported at 4.7%, which also indicates that the jobs report was more of an abnormality. I travel all over the country on a weekly basis for work and the common thing I hear is that employers struggle to find employees. It is not limited to geographic region either, it is nationwide. Finding employees and even getting applicants is a large struggle and many employers are having to reach out to temporary employment agencies for the first time. I have experienced where locations have called a temporary service for help and the temporary service said that they couldn’t even find employees. So, I don’t put a lot of stock in May’s jobs report because the fact is there are thousands of vacant positions nationwide that employers are unable to fill. Additionally, wages are increasing due to employers needing people and paying top dollar to get good people. This helps prop up the economy as consumer spending increases as a result.
Today’s housing market continues to look promising and the upward trend of purchase mortgage applications has had a steady increase. Housing prices have rebounded nicely and many people are eager to sell and buy a bigger and better home. It is natural for people to get nervous about housing prices being inflated as they were prior to 2008. Rest assured, the mortgage industry became extremely regulated after the housing market crash and values are not inflated in the same fashion as they were previously.
So what does all this mean? It means people should not react and automatically assume the worst. Keep your long term goals in sight and don’t readjust because it could be a volatile summer. Remember that while seeing large market declines can cause some nervousness based on what we experienced previously, but right now it does not appear that it should be a cause for panic. Markets will ebb and flow like other aspects of the economy and it is normal to see corrections from time to time. Do not be alarmed if the Feds adjust back the short term outlook for a bit while the world reacts to the news of the UK and the global market performance. Most importantly, do not immediately log into your 401k accounts and watch on a daily basis. This ends up causing unnecessary stress and reactions that could cost you in the long run. I will enjoy the summer sun and nice weather and choose not to focus on what the stock market is doing for now.
Information in this article is the opinion of the author and is for informational purposes only. Information should not be construed as financial or investment advice. For investment advice, please contact a licensed financial advisor.
About The Author
Gustan Cho is the Editor In Chief for Gustan Cho Associates Mortgage And Real Estate Information Center and is a licensed mortgage loan originator who is an expert in originating FHA Loans, VA Loans, USDA Loans, Non-QM Loans, Jumbo Mortgages, FHA 203k Loans, Reverse Mortgages, and Conventional Loans. Gustan Cho’s passion is helping home buyers who had prior credit and financial issues realize their dream of home ownership become a reality . Gustan Cho realizes the challenges of securing a home loan when your credit is less than perfect because he went through the loan process with less than perfect credit. He was pre-approved initially to get a last minute mortgage loan denial after providing the mortgage lender she was dealing with everything they requested. Gustan Cho decided to get associated with a national mortgage lender that had little to no lender overlays, Cross Country Mortgage Inc., so he has all of the tools necessary to help one home buyers at a time and have a 100% closing ratio. Gustan Cho is available 7 days a week to take your calls or answer your emails on any mortgage related questions you may have and can be reached at 312-716-8151. Gustan Cho’s email address is email@example.com .