MONTGOMERY, Ala. (WSFA) – Though stocks began to trend back upward Friday, the major stock market index funds posted weekly losses. The S&P 500, Nasdaq, and Dow Jones all declined by about 2% to 3% at the end of the week.
The stock market was marked by high volatility this week, mostly in the red. While it can be anxiety-inducing to see your stocks drop by multiple points in one week, Troy University economics professor John Dove says this isn’t abnormal.
“I don’t think that it’s necessarily something that people should get extremely worried about,” Dove said. “We can see in any given day stocks and the stock market swing three percent or more.”
Dove says it’s important to look at the economy from a bird’s-eye view.
“What’s happening in the labor market? What’s happening to employment? What’s happening to wages and wage growth? What’s on the horizon as far as inflation is concerned?” he asked.
As he looks at those factors, Dove believes the economy is still pretty stable.
“For real concerns and worries to start to pop up, we’d need to see consistent downturn in the stock market and a significant trend in that direction, along with problems in the labor market and things like that,” he said.
Dove’s philosophy is that investing in the stock market is a marathon, not a sprint — so don’t overreact.
“Don’t necessarily worry about two days of market volatility. The stock market can swing 3% or more in a single day. What really matters is the overall health of the macroeconomy which moves much slower,” he said.
Everyone has unique investing goals, so Dove says the best thing to do is talk to a financial advisor about your specific situation.
While the stock market was overall in the red this week, it finished on a positive note Friday. It did not, however, erase all of the declines we saw earlier in the week.
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