🔎 What's happening to the stock market today?
The first half of 2024 was a continuation of last year’s bull market, with AI hype largely fueling the year’s early momentum. Through July 16, the S&P 500 was up almost 20%, and the Nasdaq was up over 25%.Â
But something shifted in mid-July.Â
What first appeared as a seemingly healthy corrective to tech sector hype and a turn toward all-but-forgotten small-cap stocks has become a larger drawdown, and today’s market movement confirmed that.
Since then, these leading indices have noticeably retracted, and the S&P and Nasdaq ended last week down 3.3% and 5.5%, respectively.
On Monday, the downward trend continued.
- U.S. stock indexes continued to fall: The S&P 500 is down approximately 3% on the day, the Nasdaq roughly 4%, and the Dow Jones by about 2.5%.
- The volatility kicked off in Japan, where the Nikkei index began trading on Sunday night U.S. time. By the end of Monday, the Nikkei was down 12%, its worst-ever single-day decline.
- Crypto hasn’t been safe either, with both Bitcoin and Ethereum down about 7.5% and 11%, respectively.
Why is this happening?
Although there is rarely a single, specific reason for any market trend, there are certainly some noteworthy catalysts behind this drop.Â
- Murmurings of frustrations with the AI hype on Wall Street have been building for quite some time now, and last week, they reached a tipping point. Investors are growing concerned that big tech’s lavish spending on AI is becoming reckless, and they’re asking where and when that ROI will show itself.Â
- Plus, geopolitical turmoil is likely getting to investors, and growing anticipation of a coming interest rate cut may have fueled some apprehension as well.Â
- Last week’s July jobs report was disappointing, too, with hiring slowing and unemployment ticking up to its highest level since 2021.Â
- Big whales like Warren Buffet’s Berkshire Hathaway shedding $390 million worth of Apple shares didn’t help much either.
Some perspective
- To be clear, there’s no reason to panic when things like this happen. In 2023, the S&P 500 returned over 21%, and the Nasdaq churned out over 40%—and both of these indexes dropped 8.8% and 9.8%, respectively, across four weeks last fall.Â
- Consider this: The S&P 500 is down over 8.2% from its peak this year, and it’s still up over 9.5% year-to-date. Historically speaking, that’s still an above-average year. Corrections like this might feel dramatic, but they are ultimately completely normal in the stock market cycle.
How Origin can helpÂ
- Automate your investing for times like these: Market corrections are inevitable, but that doesn’t mean you have to ride a roller coaster of emotion along with them. Origin allows you to select a risk-tolerance level and portfolio allocation, enabling you to “set it and forget it” during chaotic times—yes, we’ll even rebalance for you.Â
- Professional support: It’s normal to feel a bit uneasy during tumultuous economic times, but our financial professionals are here to help. As an Origin member, you get easy access to our team of Certified Financial Planners®, who can answer your questions and provide guidance.
Answers to your questions
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