SPRINGFIELD, Mass. (WWLP) – U.S. stocks remain volatile after another morning of the Dow Jones plunging nearly 400 points as investors brace for the Federal Reserve’s guidance on upcoming interest rate hikes.
Inflation is at 7 percent. It hasn’t been that high in more than 40 years. That is playing a big role in why the stock market is fluctuating so rapidly these last few weeks.
The S&P 500 swung back toward positive territory near the end of the trading session on Monday after dropping more than 1,000 points. It was on pace for its worst monthly decline since March 2020 and worst January performance ever.
These fluctuations are due in part to the stimulus, as well as pandemic-related disruptions like supply chain issues. A financial advisor at St. Germain in Springfield said investors shouldn’t be too worried but it’s worth keeping an eye on.
“For the average person, like their 401k or for really long term money, I think for the most part they can ignore the noise and really focus on their long term plan. For investors that are a little more in the weeds on it and the day-to-day basis is does present opportunity so the volatility gives people a chance, as things come down in price, it gives them an opportunity to buy things on sale.” *Matt Farkas, CFA | Vice President/Portfolio Manager, St. Germain Investments
Farkas said he expects stocks to continue their up and down pattern for another few weeks. And just to put things into perspective here and give you an idea on how much inflation has increased, if you’d put $10,000 in S&P 500 stocks at the start of 1972 and just left it there, it would be worth more than $1.8 million today.