U.S. Stock Market Goes For A Wild Ride

The U.S. stock market has been riding quite a roller coaster the passed two weeks to say the least. Just last week the Dow Jones Industrial Average (DJIA) saw gyrations of over one-thousand points in a single day. These huge moves send what has been a massive bull-market over the last four years off of its highest levels by more than 10, even 15 percent in some major indexes. Investors expect this sort of volatility to remain as questions over the Federal Reserve’s impending interest rate hike and concerns of slowing growth in China linger.

Interest rates have been held at historically low averages over recent years by the Federal Reserve in an ongoing effort to boost the economy along with the recently ended quantitative easing. As the economy continues to show signs of a healthy rebound, investors know the increase in rates could happen at anytime. Recent hawkish comments by various treasury secretaries have led many investors to believe the rate hike could be coming as soon as this month.

The big concern is not just one issue, but what appears to be a perfect storm of many. With slowing growth in China, a strong US dollar, shaky financial stability in Europe and unexpectedly low GDP numbers for the US, everyone is asking if the United States is truly ready for the increase in interest rates. Many investors say no and believe the rate hike will only send the stock market crashing yet again. Even after all of the concern domestically and globally the Federal Reserve has offered little insight on whether or not they will go through with the rate hike and how soon.

Until the Federal Reserve makes their decision on interest rates, any hint of negative of negative news will rock the stock market. Movements of greater than 1.5% have been unusually common the passed few weeks, and such big movements are only likely to continue until positive news and some help from the Federal Reserve stabilizes the stock market. Until then, investors need to strap in and prepare for a wild ride.

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