US Stock Markets Are Retreating. Should Investors Be Worried?

Continuing a second day of decline, the US stock market indices all trended down as Thursday trading came to a close, with the Dow Jones dropping by 0.47%.

The Dow was not the index with the biggest decline on Thursday, though. That would be the Nasdaq Composite with a loss of 0.64%, followed by the S&P 500 with a drop of 0.60%.

This decline comes fast on the heels of about of week of record setting upward movement from. After the election, the stock market climbed rapidly to set record highs, but it has now slowed down and continues to decline. We expect the market to further decline today, closing out the week much lower than it started.

For instance, the Nasdaq Composite began the week on Monday at 19,271 and is currently at 19,107 and dropping. The worry now is whether the market indices  will drop even further and end up below where they were when Donald Trump won the election. That seems drastic and unlikely, but it is concerning that the market is dropping so quickly now.

Interest Rate Considerations

The Federal Reserve’s chairman, Jerome Powell, said recently that the Fed is not rushing to cut the interest rates. Doing so too quickly would hurt the economy and cause inflation to rise. He said that inflation is increasing slightly, and we saw that October inflation report earlier this week.

Powell is optimistic that the inflation rate is moving close to 2%, which is the Fed’s goal for a healthy economy. However, that progress slowed down in October. If the inflation rate does not continue to decline, then a further interest rate cut could be a little longer in coming.

Stock Market Concerns

The current state of the market appears to be that a corrections occurring. This happens after a massive bull trend like what we just saw, and investors should not worry too much that the market will continue to decline. A Number of stocks have skyrocketed in the past week and should continue to stay high, particularly some other stocks that have performed very well this year, like Meta, Google, Apple, Nvidia, and Wal-Mart.

Of some concern is the state of vaccine-centric stocks, like Pfizer and Novavax. Their shares fells on Thursday as Trump announced that Robert F. Kennedy Jr. would take over the Department of Health and Human Services. As more cabinet members are appointed, we will see direct correlation to stock market movements, but this appointment seems to be one of the most significant.