Why Share Market Is Going Down & When Will It Be Steady: There are many reasons why share market is going down. The main reason is inflation, as already discussed in our previous article. All the share market indexes are dropping drastically. The last 2 weeks have been a very unstable stage for the share markets, and investors fretted that the rapid interest rate hikes for combating inflation would actually slow down the economic growth globally.
Their fear isn’t if we look into all the sides. Fed increased the interest rates on stock markets drastically to bring down inflation and create a balance in economies. However, it’s actually creating chaos. Investors are pulling back their stock investments; big companies are also taking measures to stop their companies from getting into losses and whatnot.
Why Share Market is going down? The Recent Updates
According to CNBC, the 10-year Treasury note got 7.5 more basis points added to 2.919% on June 1 at 4:08 pm. Again, such an increment could reverse the hopes of investors that the Fed would stop with the recent hikes after June/July.
On June 3, 4:57 pm EDT, the 10-year Treasury note increased to 2.940%.
As per investors, these higher rates in the share market could slow down the economy to a great extent, and it may even fall down into recession. It even puts the future earnings of investors at stake, which will make the stock markets less attractive to people.
According to the Wall Street Journal, the stock market didn’t have an undervalued index even at the lowest point in the mid of May. There was the S&P 500 index which had a recent bounce up to 5.3% since May 19. However, it could just be a new bull-market leg or a passing bear-market rally.
Then again, we can see the drastic changes the inflation, Fed’s decisions, and other such global issues are bringing to the share market. All of these are the reasons why market is going down today.
Technology Shares Retreating From The Share Market
A week ago, technology shares retreated during the occasions of rising rates. Nvidia lost about 4.5%, while Micron Technology lost 7.2%. Even the Meta platform declined by about 4.1% roughly.
All these declines keep happening, and it’s all due to the interest rate hikes, oil issues due to Ukraine & Russia War, lockdown in Russia, etc. It’s unbelievable to know that even Apple pulled back around 3.9% of the share after a research note by Morgan Stanley.
Even Elon Msk said that he has a “super bad feeling” about how the economy will be, and hence he planned to cut down around 10% of the jobs at electric carmakers. He sent the email with the title “Pause all hiring worldwide.”
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This shows how inflation is also affecting the job markets globally. In addition to that, Tesla shares also fell by 9.2% after Elon Musk’s previous statement.
Most of the investors are focusing on selling their shares. In comparison, others wonder why share market is going down and what they shouldn’t do in such a situation.
How to React When the Share Market is Going down?
Due to the current global exogenous events and inflation, the share market went down. It may test certain investing tenets such as diversification and risk tolerance. However, investors should remember that the share market is cyclical, and the downturn wouldn’t remain permanent. In current situations, investors should have their long-term goals in mind and let the case of inflation pass.
They need to understand their risk tolerance and prevent selling their shares. They may be selling it too weary, and the tables may turn a few days, weeks, or months later. However, short-term investors won’t see a profit in the share market now. The market is way too volatile currently to actually think of getting only positive results.
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Final Thoughts
If you are still wondering why market is going down today, the answer is probably, the current inflation, Fed’s decisions, and other global issues. The hike in the interest rates is also a significant cause of the increased volatility in the market, which is why share market is going down. Knowing about risk tolerance and taking thoughtful measures is best for investors. Several investors believe that the economy may go down drastically, and we may enter into a recession. Even Elon Musk started having a bad feeling about this. Let’s see what happens next.
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