What is a regular investor to make of it all? What about people who have money in bank accounts? Below are some answers to questions that are probably on your mind.
Q. Why did the stock market fall so far so fast on Monday?
A. The element of surprise surely didn’t help, since everyone was expecting the bailout bill to pass. There may have been a bit of investor disgust thrown in, too, a sense that our representatives in Washington just don’t get it.
Fear may be the biggest driver, however — the worry that it may be weeks or longer before companies can get the affordable, short-term loans they need to finance their operations. Without easy access to that money, it’s hard to run a profit-making operation on a day-to-day basis, let alone grow over the long haul. The professional investors who often drive big market moves don’t want to hold onto stocks to see if things will really get that bad.
Q. What’s likely to happen in the markets over the next few days?
A. It’s possible that Monday’s market moves will spook members of the House of Representatives enough that they will be willing to change their votes with only a modest amount of compromise. Or, there may be hasty efforts to write a new bill from scratch. This will take days, however, not hours, since Tuesday is the Jewish holiday of Rosh Hashana. Stocks may rebound, at least somewhat, if another similar bill emerges. But much will depend on the revisions.
Read more here: ‘Is My Money Safe?’ and Other Questions to Ask