WASHINGTON — U.S. stocks plunged when trading opened on Monday, dropping more than 1,000 points following a similarly huge drop in Chinese stocks. But by 11:15 a.m., they’d rebounded somewhat, down only about 400 points.
So is the worst over? Michael Santoli, a senior columnist for Yahoo! Finance, tells WTOP it’s too early to be sure.
“I do think that was just a very violent shakeout at the open.”
The sell-off came in response to the fears inspired by the Chinese plunge, Santoli says, and the skittishness seems to be over.
“We’ll see if the floor was set in the morning.”
Santoli adds that the market, which hadn’t had a drop of more than 10 percent in more than four years, was overdue for a correction. He adds that many financial analysts had spent the past year remarking about “how boring and unresponsive the U.S. stock market was to a lot of what was going on in the world,” including negative global growth and the instability of Chinese markets.
He says he was surprised that the correction came “all at once.”
Still, it’s important to keep your perspective: This downturn has “given up about a year’s worth of gains.”
“That’s not good, but it’s also not so bad,” particularly compared to the low points of 2009 and 2011.
He adds that it’s a good opportunity to invest if you don’t have enough stocks in your portfolio, and you need to have that kind of ice water in your veins.
“If you’ve been genuinely unnerved about what’s happened in the markets in the last three days, if you really feel like you can’t sustain this kind of a ride, then maybe you’re overexposed to stocks relative to your risk tolerance, and it’s time to evaluate whether you belong there.”
It’s about the long haul, Santoli says.
“If you need the money tomorrow, you should never really have it in stocks.”