Wall Street continued its wild ride Tuesday morning as the Dow Jones opened down 522.94 points, or 2.15 percent. The blue chip index briefly dipped into a correction phase — a 10 percent decline from its 52-week high — before rebounding and completely erasing its early losses.
It was the third straight trading day of steep losses and extended a worldwide sell-off that saw $4 trillion wiped off the global market.
The market mayhem began Friday after a robust jobs report fed investor fear that a healthy economy would lead the Federal Reserve to raise rates multiple times this year and tighten conditions for borrowing money.
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Investors began to scramble for safe havens like bonds and Treasury notes, putting yet more downward pressure on stocks.
On Monday, the Dow suffered its worst ever one-day point decline, closing down 1,175 points in a remarkable fall from grace. It was a bruising reminder for investors — and for President Donald Trump, who has frequently touted the stock market gains as proof of the success of his presidency — that an overbought market will eventually stumble.
Exacerbating volatility on Wall Street is a changing of the guard at the Fed: Jerome “Jay” Powell, a former Fed governor, was sworn in as chairman on Monday, and three spots on the board remain open, making monetary policy movements hard to predict.
“We don’t know where the Fed is going from here,” Lindsey Piegza, chief economist and managing director at Stifel Fixed Income, told World News. “That certainly adds some increased volatility for market participants.”
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But the underlying economic fundamentals remain strong, cautioned investment strategists. Unemployment is at an 18-year low, wages are up, and healthy corporate earnings continue to pour in.
Keep the sell-off in perspective, warned Kristina Hooper, chief global market strategist at Invesco.
“Don’t be scared, and don’t be impulsive,” she said. ‘Be disciplined no matter what the market environment, and keep saving and investing according to your long-term plan.”