All Is Well, Remain Calm, Suggests Investment Chief
The U.S. stock market has had a brutal few days, culminating in what looked like a mini crash on Monday, as the Dow Jones Industrial Average dropped 1,000 points in minutes of the opening bell.
The market rebounded, but still closed down almost 600 points.
Tuesday, the market rebounded and the Dow Industrial jumped 250 points by 8:30 a.m. But, stock plunged in the last hour of trading Tuesday to wipe out a day-long rally and close down 204 points, or about 1 percent.
The down day for the Dow Industrial average put the losing streak at six straight days.
So what’s going on? KNPR’s State of Nevada talked to Marc Doss, Nevada’s chief investment officer with Wells Fargo.
"It has been crazy," Doss admitted.
However, he doesn't believe it is a sign that the U.S. is headed for another recession.
"I think we're adjusting to a new market reality" he said. "Chinese growth is slowing more rapidly than we originally thought. There is too much dependence in the world on Chinese growth."
He said that part of the problem is China is moving from an export-driven economy to a consumer-driven economy and that transition is not going smoothly.
That does not mean Doss has lost confidence in China. He believes it will keep growing and the economic shifts it suffers won't have a big impact on U.S. because we are not as dependent on it as other countries like Brazil or Indonesia.
Despite the volatility, Doss doesn't believe it's time for people to pull their money out of the market. He believes it's an opportunity.
"Most of us have our 401k's as our nest egg, this is the time to step in and actually buy during times of upheaval," he said.
Wells Fargo has moved investments into what are known as large cap stocks, meaning stocks from large, stable corporations like Apple.
Doss is also not concerned because he believes this is a market correction that is needed once a year.
"Normally, every year we have a 10 percent correction in the stock market but it hasn't been that way," he explained. "We had gone almost four years, until yesterday, when we had officially a correction"
Doss does believe the volatility will push back the Federal Reserves plans to hike interest rates, which most people believed would happen next month.
"The inclination was to get started in September and now it's much less likely with what's gone on," Doss said.
Doss believes hiking interest rates, if done correctly, would actually boost confidence, "because it will show that the U.S. economy is stable enough and is growing fast enough that it can handle a little bit of a rate increase."
Marc Doss, chief investment officer, Wells Fargo