‘Be aware,’ advises money expert in the face of the recent retail bloodbath as Wall Street suffers worst day in 2 years

A MAJOR market meltdown gripped investors on Monday, with the Dow Jones Industrial Average plummeting by 1,000 points before showing slight recovery.

This drastic drop , which affected several US retailers, stemmed from fears surrounding the weakening economy and spurred questions about another recession .

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Outlook Financial Center

The turmoil began on August 2, when labor market data for July revealed a disappointing addition of only 114,000 jobs, falling short of the forecasted 175,000.

Compounding the issue were less-than-encouraging earnings reports from tech giants Amazon and Intel, erasing the optimism that had built up following the Federal Reserve’s hint at a potential interest rate cut in September, per the Bureau of Labor Statistics .

Critics have since pointed fingers at the Federal Reserve, arguing that it had missed the opportunity to lower interest rates promptly.

This inaction has raised concerns about pushing the US economy into a recession by keeping rates at their highest levels in two years.

Notably, Warren Buffett’s recent decision to sell off about half of his Berkshire Hathaway holdings in Apple sparked further speculation among investors about the underlying health of the market.

A backdrop to this sell-off was the Bank of Japan’s decision to raise interest rates by 25 basis points, reversing two decades of ultra-low rates.

This shift, coupled with the unwinding of the “carry trade” where large investors borrowed cheap money in Japan to invest in US stocks, led to widespread market volatility.

“This morning, market volatility reached its highest level since the onset of the Covid-19 pandemic,” stated Gregory Daco, EY chief economist, per USNews .

“However, the market panic appears disproportionate.”

OUT OF SYNC

In an exclusive interview with The U.S. Sun, Rob Burnette, an investment advisor representative and professional tax preparer at Outlook Financial Center in Troy, Ohio , pointed to the media’s influence in amplifying nervousness around inflation , jobs, and interest rates.

“The latest jobs report wasn’t in sync with analysts’ expectations, so there was a lot of program trading on the sell side of the market,” he explained.

“The reaction snowballed and created, in my opinion, a significant overreaction to the events.”

Burnette believes that referring to these events as a “crash” may be overstating the situation.

“I think we are seeing corrections, which are a natural part of the market,” he said.

The latest jobs report wasn’t in sync with analysts’ expectations, so there was a lot of program trading on the sell side of the market.

Rob Burnette Investment advisor representative and professional tax preparer at Outlook Financial Center in Troy, Ohio

He emphasized that some investors may have locked in losses without a clear understanding of when to re-enter the market.

“Corrections are a normal part of a healthy market,” Burnette said, then added, “I don’t think the recent correction is significantly different from other ones. For me, it was just another day in the office.

THERE ARE CORRECTIONS

Burnette anticipates that average Americans may not face drastic consequences of the recent volatility.

“The up market we have been experiencing will have corrections along the way,” he noted.

He added that the possibility of a recession is there, but he doesn’t necessarily blame the recent drop.

“I believe we have been teetering in and out of recession for the past two years. Jobs reports and GDP rates are almost always revised downward,” he explained.

He also pointed out that the most recent employment gains were primarily in part-time positions, which could leave many workers struggling to make ends meet.

“If you dig into the data, the most recent employment reports show most of the jobs created were part-time at the expense of full-time jobs.

“The job gains primarily benefitted government and foreign workers. If that trend continues, then employees will have to take on two to three part-time jobs to make ends meet and may lose employer benefits like health care.”

I believe we have been teetering in and out of recession for the past two years. Jobs reports and GDP rates are almost always revised downward

Rob Burnette Investment advisor representative and professional tax preparer at Outlook Financial Center in Troy, Ohio

KEEP AN EYE

Burnette believes that the stock market and the economy are interconnected yet distinct entities.

“Both will ebb and flow over time, but not at the same rate or level,” he explained.

He pointed out that one should think about the importance of sound investment risk management, living within one’s means, and maintaining a long-term financial plan.

As the situation evolves, Burnette advises Americans to remain vigilant about their financial decisions.

“Be aware of the risk you are taking with investments and know where your money goes in detail,” he emphasized. “There will always be a level of uncertainty, so this is eternally good advice.”

The U.S Sun has extensive coverage on the recent market drop, including information on a little-known rule relating to stocks.

You can also learn more about the drop and what it affected.

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