SAN ANGELO,TX - A financial advisor offers reasoning on why the Down Jones Index decreased, then increased in a matter of two days.
"Your market is going to initially be in the short term led by headlines and emotions," said Heather Wylie, financial advisor for Edward Jones.
Wylie said the 1,175 point drop on Monday was caused by two things: one is the rising rates.
"Last week's job report showed that wages increased the strongest since 2008,which is great news for our economy," Wylie said. "But as a result, this began to foster fears of inflation."
The second reason is a combination of people refusing to sell their stock and the alarming headlines.
"An example of an alarming headline would be something like unemployment is at an all time low, this might lead to inflation," Wylie said.
This isn't the first time the Dow has significantly dropped: Here is a look at some past ones:
August of 2015: Market dropped 11.2 percent in one week.
January/February 2016: Market dropped 12 percent
June 2016: Market dropped 5.3 percent in three days
"We're even predicting that even though it's not very comfortable, we can expect more volatility." Wylie said.
After the news broke on Monday, on Tuesday, the Dow rose 570 points. Wylie said the economic outlook for 2018 looks great, but the if the Dow does drop again, make sure you are rebalancing if you need too.
Wylie added to see a financial adviser if you ever have any questions about finances.
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