At 7 am this morning, May 2nt, my total return stood at $468.81. This number may seem significant, although my investments started at $480. Throughout the past couple of weeks, the market has shifted and has proven to be very unpredictable by day. On certain days, it closed around $475 compared to others, where it closed around $470 or less. I plan to keep the money in the investments until further notice to see how the market continues in case future events provide a positive and higher ROI (return on investment).
Market volatility and return vary due to many different factors. The recent shift change in the market has been due to the latest data and news. Although one may think the issues in the Middle East have heavily affected the market over the past month, this mainly changes prices on commodities rather than the whole market. The main reasons for the changes in the market reside heavily on Fed rate cuts and inflation throughout the past couple of months and company performances. "inflation has come down substantially already. "In the U.S. headline inflation has gone from 9.1% in June 2022 to 3.5% last month" (Mahajan). This provides an excellent explanation as to why the market increased throughout the past couple of months and shows how the market can shift drastically. In recent weeks, interest rates have started increasing,, causing underperformance in "interest rate sensitive parts of the market" (Mahajan). Another reason the market was at an all-time high was due to the predU.S.S.ted US Federal Reserve budget rate cuts in response to inflation. Federal budget and interest rate cuts occur when the economy slows in order to reduce the costs of borrowing and loans so more individuals spend and invest. Cuts also occur to renew or refresh economic growth. In recent months, around six predicted cuts were coming this year and in the summer, which has diverted to one predicted cut delayed towards the end of this year or not at all. Additionally, the market is affected by corrections and company earnings being announced and "investors closely looking for any signs of weakness" (Mahajan). Corrections are known to occur when, "a major stock index [or any asset], such as the S&P 500® index or Dow Jones Industrial Average, declines by more than 10% (but less than 20%) from its most recent peak" (Schwab.com). They may cause return to lower for a certain period of time up to a couple months, although should eventually recover with the market long-term.
Corrections and other event may cause the market to fall unexpectidely, although investors should either learn to ride it out long-term or learn the best ways to go in/out of the market through research, a professional or a financial advisor.
Thank you for reading my investing and finance blog!
Mahajan, Mona. “Previous Week’s Weekly Market Wrap.” Edward Jones, Edward Jones, www.edwardjones.com/us-en/market-news-insights/stock-market-news/previous-weeks-weekly-market-update. Accessed 2 May 2024.
Schwab.com. “Market Correction: What Does It Mean?” Schwab Brokerage, www.schwab.com/learn/story/market-correction-what-does-it-mean. Accessed 2 May 2024.
Comments