WASHINGTON – Early trading Tuesday offered investors a glimmer of hope after a nightmarish sell-off to start the week. Monday's market meltdown resulted in Wall Street's worst trading day in two years.
The Dow Jones Industrial Average shed 1,033 points, dropping 2.6%. The S&P 500 and the Nasdaq saw at least 3% declines each.
Tech companies took the biggest hit. Apple, Amazon, Tesla, and Google's parent Alphabet – part of the "Magnificent Seven" influential tech stocks – lost more than $650 billion in value.
News of the market tumble triggered serious concerns of an economic slowdown or even a recession. However, experts warned investors to avoid panicking.
"Right now, it feels a little more like a market event than it feels like an economic event," said Mark Hamrick, a senior economic analyst with Bankrate.
Appearing on CBN's Faith Nation, Hamrick suggested last week's dismal U.S. jobs report spooked investors into what's called a "risk-off trade."
"That means they're just trying to take some money off the table, out of the market. And it remains to be seen whether this is something more serious than what might otherwise appear," he explained. "So, we'll see whether the sell-off is overdone."
Some economists predict the Federal Reserve may now feel pressure to make deeper interest rate cuts than previously expected during its next scheduled meeting in September. Speculation of taking quick action in an emergency meeting seems less likely.
While many were left to wonder what to do with their investments, including retirement funds, the preliminary consensus among analysts like Hamrick is to consider the long term.
"The major averages are down 5% over the past five days. That feels like a lot in a short amount of time, but those same key averages are up about 10-15% over the past year. And that means over the past year you're still doing better," he told CBN News.
Economists cite the dismal jobs report, high interest rates, and tensions in the Middle East as causes for Monday's sell-off. But the 2024 race for the White House shows a political opportunity to play the blame game.
Seeking to tie the market's performance to his opponent, former President Donald Trump labeled it the "Kamala Crash."
His campaign quickly put out a political ad excerpting previous statements from Vice President Kamala Harris. Those remarks – originally designed to tout the economic policies of President Joe Biden, which the administration referred to as "Bidenomics" – now spun to appear she's using the phrase to refer to the sell-off.
Political observers say the goal is to tether Harris to the economy as if she were the incumbent.
"In some ways, she's a new factor, and it's unclear to me how voters would process her role in creating this economy," said Mark Caleb Smith, who directs the Center for Political Studies at Cedarville University near Dayton, Ohio.
"Surely, this will create a lot of angst, but I'm not necessarily convinced it will cut one way or the other as it relates to voters," he added during his interview with CBN News.
Since voters consistently rank the economy as one of their very top concerns this election cycle, and with talk of recession back on the table, it's unlikely that concern will fade anytime soon.
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