Concerns about the US economy
Despite some signs of cooling, the US economy has been volatile even at high rates, outperforming Europe and Asia. Then came last week's economic reports.
Weak manufacturing and construction reports were followed by the government's monthly report on the labor market, which showed a sharp drop in hiring by US employers. Concerns that the US Fed may keep the brakes on the economy for too long have spread through the markets.
The Big Tech movement
A number of Big Tech stocks posted double-digit market gains through July. But their momentum changed last month on concerns that investors had pushed up their valuations and that their profit expectations had grown too hard to meet—a view that gained credence when the group's latest earnings reports were significantly lower.
Apple fell more than 5% on Monday, after Warren Buffett's Berkshire Hathaway disclosed that it had reduced its stake in the iPhone maker. Nvidia lost more than $420 billion in market value Thursday through Monday. Overall, the S&P 500 technology sector was the biggest drag on the market on Monday.
Japan's rollercoaster
The Nikkei fell the most in two days, down 18.2% on Friday and Monday combined. Another factor that caused this decision was the increase in interest rates by the Bank of Japan last week.
The BoJ's rate hike has had an impact on what is known as a trade-off. This is where investors borrow money from a country with low interest rates and a relatively weak currency, such as Japan, and invest those funds in areas that will bring high returns. Higher interest rates, along with a stronger Japanese yen, may force investors to sell stocks to pay off those loans.
What should investors do now?
The wisdom here is this: Hold on tight. Experts and analysts encourage taking the long view, especially for investors concerned with retirement savings. “Most of the time, panic selling on a red day is a good way to lose more money than you saved,” said Jacob Channel, senior economist at LendingTree, who reminds investors that the markets have rebounded from worse sales than they are now. one.
Bitcoin recovered to $56,490 on Monday morning after the price of the world's largest cryptocurrency fell to just over $54,000 during Monday's session. That's still down from about $68,000 one week ago, according to data from CoinMarketCap.
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