The Times Herald (Norristown, PA)
Wall Street whiplash: Stocks’ volatility looks here to stay
NEW YORK >> The stock market hasn’t been this dizzying in years, and investors may need to get used to it.
The S&P 500 slid 4.6 percent this past week as worries piled up about the economy’s strength, global trade and interest rates. It was a whiplash-inducing reversal from the prior week, when the S&P 500 jumped 4.8 percent. The last time investors experienced such a big swing in stock prices between two weeks was in late 2011.
It’s the latest gyration for a market that’s become increasingly twitchy, as investors try to make sense of big questions that don’t yet have clear answers for. Will tariffs derail the global economy and sink profits for businesses around the world? Will the Federal Reserve raise U.S. interest rates too quickly and choke off growth?
Many Wall Street strategists see more volatility on the horizon.
“What we have experienced in 2018 and most acutely since October is, unfortunately, more normal than not,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management.
With economic growth expected to slow and interest rates expected to rise, many along Wall Street are forecasting 2019 will be a rocky year for stocks. “The end of easy” is the title that Wells Fargo Investment Institute gave for its 2019 investment outlook.
Easy, for investors, is what the stock market had been for most of its run that began in the spring of 2009. For most of the past decade, the Federal Reserve kept interest rates extremely low to promote economic growth following the 2008 financial crisis and the Great Recession. That helped keep borrowing costs down and lift all kinds of markets.
But now the Fed is gradually raising interest rates. It has increased short-term rates eight times since 2015, and economists expect another hike to come later this month. Those higher rates —
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AP Business Writer