What’s going on with the stock market? asks Grumpy Editor.
The Dow Jones industrial average, S&P 500 index and Nasdaq composite see more than a week of heavy selling in whipsaw action, breaking key support lines and leaving them 10 percent off their highs.
All investment eyes are on today’s markets.
The dive in stocks comes despite positive developments that don’t happen too often:
- The job market is strong with nearly nine years into an expansion that followed the “great recession.”
- Consumer confidence is solid and manufacturing is growing.
- Businesses are hiring.
- Wages are rising.
- Existing home sales last year reach the highest level in 11 years.
- Americans are optimistic about the economy
- Household debt is under control.
So, what’s worrying Wall Street?
Words most heard are inflation and the Federal Reserve’s indicated raising of short-term rates three times this year.
Grumpy Editor reminds that current inflation is tame compared to Jimmy Carter Administration’s days when the president enacted an austerity program by executive order, saying inflation had reached a "crisis stage." Both inflation and short-term interest rates reached a whopping 18 percent in February and March, 1980.
As for this year, Kiplinger’s sees inflation at 2.5 percent, a bit higher than last year’s 2.1 percent, reflecting both higher gasoline prices and higher prices in general.
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