4:00pm

Fri April 11, 2014
Economy

Onlookers Show No Worry Over Market's Week In Tumult

Originally published on Fri April 11, 2014 8:13 pm

Transcript

MELISSA BLOCK, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

AUDIE CORNISH, HOST:

And I'm Audie Cornish. Volatile, that's the kind of week the stock market had. Investors sold off high-flying technology and biotech stocks. Weak bank earnings also added to the sour mix. The NASDAQ is down 8 percent from its peak this year. The S&P 500, it's off 4 percent. But as NPR's Chris Arnold reports, the sell-off hasn't triggered alarm and indicators for the broader economy are mostly positive.

CHRIS ARNOLD, BYLINE: Technology stocks started falling late last week. Then they rose back, only to crash again. Yesterday, the NASDAQ plunged more than 3 percent. That's its biggest one-day loss in more than two years. The strange thing is, though, that most of the economic news has been good, so what's with the falling stock prices?

JULI NEIMANN: Well, we're into another period of time here where everybody's going to leave the trading day scratching their heads, wondering what in the heck happened here.

ARNOLD: Juli Neimann is an analyst with Smith Moore and Company in St. Louis, Missouri. She says U.S. stock indexes rose 30 percent last year, and they can't keep rising like that, so...

NEIMANN: Swings in volatility in the stock market typically are not present when the market's rising, which it has been, of course, since the fall of 2009. But now since 2014, it's been very choppy.

ARNOLD: It's hard to know just what triggered this latest round of selling. It could be investors who are just taking some profits by selling stocks after a good run. David Kotak is chief economist at Cumberland Advisors. He says he's not seeing any signs of panic out there, and he's not worried.

DAVID KOTAK: Markets can correct in an ongoing bull trend 3, 4, 5, 6, 7 percent at any time, for any reason, or no apparent reason. Markets do not move up in straight lines.

ARNOLD: Kotak agrees that we're not going to see anywhere near the stock gains we saw last year, but he thinks the overall trend will still be slowly up for some time to come. That's because he says the economy is continuing to slowly recover, even though he says people tend to hear about the couple of days where stocks see much more dramatic swings.

KOTAK: The turtle never gets a lot of attention in a footrace. It's the rabbit that gets the attention.

ARNOLD: To go with that analogy, the rabbit would be the leaping up and down movement of the stock market day to day, but the turtle is the trend line, and that's kind of where we're headed, is slowly up.

KOTAK: Right, and that is what's going on in the United States in this gradual recovery.

ARNOLD: And Kotak says given how bad the financial crisis was, the U.S. economy is actually in pretty good shape.

KOTAK: Low interest rates, low inflation, gradual recovery, neutral central bank. It doesn't get better.

ARNOLD: Still, everybody wishes the economy was recovering faster. Job growth especially has been painfully slow for the millions of Americans who are still out of work, and wages have been flat or worse for years. Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.