Despite the cheers on Friday for the opening bell at the New York Stock Exchange, traders were bracing for another dismal day. Stocks had their worst week since the recession of 2008 wiping out about $4 trillion in market value and sending major indexes into correction territory.
Ryan Wilson, Sr. Vice President with RBC Wealth Management in Palm Desert says correction is normal, quick correction is not, “Anytime you’re seeing thousand point drops in the Dow each day those are big numbers even though the Dow is a bigger number now than it was 20 years ago it’s still shocking.”
On Thursday the Dow Jones Industrial Average had it’s largest one day point drop in history. Experts say the sell off was sparked in part by fears coronavirus will disrupt the global economy and it could get worse before it gets better.
“If the cases of coronavirus in Italy get substantially worse or South Korea that could be a bad signal for Monday,” says Wilson adding the opposite is true, if cases taper off the market could see gains.
Wilson says other world economies could suffer longer term but U.S. economy indicators, like unemployment are still strong, “I don’t think the U.S. is going into a recession because of the coronavirus scare.”
He says Federal Reserve Chairman Jerome Powell saying the Fed will take measures to support the economy helped the markets rally toward the closing bell.
His advice for everyday investors and retirees is know what you own and don’t risk what you need now, “That money shouldn’t be anywhere need the stock market but if it’s long term money that is meant to earn you a rate of return that you need for your financial plan there isn’t a signal that I‘ve seen yet where we would be telling clients to take risk off the table to sell.”