Watching Utah’s Money: why the stock market is volatile
SALT LAKE CITY — 2018, especially the end of it, saw stock market swings that may have made many people nervous. But what happened to make Wall Street such a roller coaster ride, and why?
Zions Bank Senior Economist Robert Spendlove says it’s not just up to this country. We are impacted by events in the financial markets all over the world.
“We live in a very connected worldwide economy now,” Spendlove says. “So when things happen in Europe, in Asia – specifically in China, it has an impact on the American economy and on American markets.”
When Friday’s jobs report came out, the markets rose. Experts say those reports can help drive the economy.
“Jobs are key, they are fundamental,” says ABC News Chief Economic Correspondent Rebecca Jarvis. “If you have a job, if your wages are rising, that’s what’s on people’s mind.”
“When people see what’s going on in their 401ks, or just are watching it, they start behaving differently, and that’s the concern about what happens to the economy going forward,” she added.
Spendlove says the stock market also reacts to the Federal Reserve.
“There’s concern that the Fed may have ideas that the economy is stronger than it really is,” he explains.
Federal Reserve Chair Jerome Powell addressed that.
“We’re always prepared to shift the stance of policy and to shift it significantly if necessary in order to protect our statutory goals of maximum employment and stable prices,” Powell says. “We’re listening carefully to that, we’re listening sensitively to the message that markets are sending.”
DMBA financial planner Shane Stewart says that’s good.
“The economy is like an inner tube or a tire on your car,” Stewart says. “It has to be properly inflated. It can’t be too deflated or too inflated, and if they didn’t raise rates, left unchecked, we’d have hyper-inflation.”
All week long, we’re examining what the economy holds for you in 2019. Tuesday, tune in for analysis on what long-term stock market volatility means for you.
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