401(K) FEARS AMID SLIDE
Dow plunges 500 points, more than 1,000 in week
The stock market’s stunning slide has stoked fears over 401(k) savings accounts, with one expert warning those closer to retirement have reason to worry.
“Those closest to retirement are the most vulnerable as the economy gets worse,” said MIT professor Thomas A. Kochan. “It’s very clear people are worried. The market creates this uncertainty.”
Kochan told the Herald last night those with 401(k) accounts should “stay with it” and ride out this storm — even as the market teeters over strained relations with China with President Trump threatening more tariffs.
“You’ ve got to stay with it for the long run,” Kochan added. “If you can hang in there, that’s the best advice.”
The Dow Jones Industrial Average plunged more than 500 points yesterday, bringing its weekly drop to more than 1,000. All eyes will be on the market come Monday’s opening bell.
“I don’t really see a lasting recovery,” said Aaron Dunn, Co-Director of Value Equities and Portfolio Manager at Eaton Vance Management in Boston. “I don’t know we’ll see a real balance through the end of the year. I think you might have a bit of a buyer’s strike through the end of the year.”
The Dow fell 558 points, or 2.2 percent, to 24,388 yesterday. The S&P 500 lost 62 points, or 2.3 percent, to 2,633. The S&P 500 and Dow are now in the red for the year. The Nasdaq was holding on to a modest gain.
Fueling the decline after an already hectic week was the court appearance of Chinese company Huawei’s CFO on fraud charges. The executive is accused of circumventing U.S. sanctions on Iran, and faces decades in prison.
“It’s the trade tensions and really the uncertainty that exists in the market with regard to how the trade uncertainty with China plays out,” Dunn said. “We’re in tariff negotiations with China and we arrest the CFO of one of their largest companies.”
Earlier this week markets rallied on news of a trade agreement with China, but deteriorated as specifics — or lack thereof — emerged.
“The prospect for a trade deal within the 90-day time frame, in our view, is unlikely,” Wells Fargo economists wrote in a research note. “The pace of negotiations would have to pick up quite considerably, and with evidence suggesting differences still remain, the likelihood for a deal in the shortterm remains low.”
The Labor Department also announced U.S. job growth declined modestly in November, a move that could signal a slower but still steady pace of hiring and growth next year.