The time around midterm elections has historically been associated with stock market volatility. ("Volatility" meaning the market going down.)
There's been volatility since, almost right on schedule if I may say so, and it increased this past week.
Technology Earnings and Market Concerns
Earnings reports from major technology companies, including Google and Amazon, disappointed somewhat and raised familiar concerns about the large sums being invested in artificial intelligence. This led to selling in tech stocks and also the overall market.
Some Good Economic News
This all overshadowed some good economic news btw. Third-quarter GDP grew at an annualized rate of 3.4%, up from 2.2% in the second quarter. That's a very good number, although I'm always careful about reading too much into preliminary GDP figures, as they seem to often get revised.
Corrections Are Part of Investing
At any rate, the Nasdaq 100 is now down 9.1% from its October high. That's close to a correction (defined as >10%).
The main thing to remember is that corrections aren't unusual. I think of them as the norm. Since 1999, the Nasdaq 100 has experienced 19 declines of 10% or more, averaging one every year and a half by my imperfect math (no calculator).
Markets move based on earnings, interest rates, inflation, political events, and international developments. That's nothing new.
Keeping Volatility in Perspective
Short term market fluctuations are unsettling, and as I always say, they happen fast. But they are also part of how markets work.
Warren Buffett noted, "Volatility is far from synonymous with risk."
We monitor these developments closely, but what matters is whether they indicate significant changes in the long term investment outlook.
Curtis Chambers, CFP®
Chambers Financial Group