The stock market on Monday opened with its largest drop since the beginning of the pandemic, with the Dow Jones Industrial Average lowering more than 1,000 points — and it looks like this financial rollercoaster won't be slowing down any time soon.
KCBS Radio business reporter Jason Brooks joined KCBS Radio's "Bay Current" on Thursday to discuss the stock market drop and its rebound as investors swooped in to buy shares in the aftermath of the market plunge.
The stock market recently hit correction territory, which indicated a massive point loss before closing shares.
"Correction is considered to be a 10% decline from an index’s recent peak. The NASDAQ hit correction last week and has continued to fall since then. The Dow Jones Industrial Complex was in a 100 point loss of going into its own correction," Brooks said. "I would not be shocked if we saw the market plunge again, or even turn positive. There is that much volatility in the stock market right now."
Brooks noted that the dip has mainly been caused by the Federal Reserve and inflation rates.
"The Federal Reserve indicated that it would be raising inflation rates three times in 2022," he said. "They also embarked on other moves where they would provide more liquidity into the market, so investors jumped on that. The low-interest rates made it easier for big businesses to borrow money for very cheap rates, and people jumping into the housing market. Even with today’s sell-off, it’s picked up 15,000 points since that moment, which is doubling in value. Now that the Federal Reserve is tightening its money, investors are starting to pull cash out of companies that have gone up in valuation."
Brooks added that the standoff between Russia and Ukraine has added uncertainty to the market.
"The market does not like geopolitical tension," Brooks said. "When it comes to Russia and Ukraine, it’s peaking and redlining on all of those worries. You have the potential of Russia on one side, and possibly the US on the other side. That is going to worry the world."
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