By Brenda Flanagan
Today’s closing bell finally put Wall Street out of its agony after a double-down week that saw stock markets plummet across the globe. Driving the nosedive — failing economies in Greece and China, tanking oil prices and uncertainty over the Fed’s raising interest rates, according to George Calhoun at Stevens Institute.
“I don’t view this as being a correction,” he said. “I view it as being as response to these events and the market has given back its gains for the year.”
Stocks took a hit across the board — including tech, bio, and energy — and big losers included even major players like the so-called “FANG” —
Facebook, Apple, Netflix and Google. The week ended with the Dow down at -531 down, NASDAQ at -171 down and the S&P 500 finished at -65 down. If that looks bad, China’s worse.
“That economy may be entering a slowdown or a recession even. China is now so important in the world economy that we care about that,” Calhoun said.
Meanwhile, oil fell below $40 a barrel for the first time since 2009.
“I think much more significant for Jersey and the rest of the United States is $40 a barrel price of oil. That affects the cost structure of almost every business out there, certainly every manufacturing and transportation-related business,” he said.
In New Jersey, that could impact the shipping business tied to exporting because China moved to prop up its economy by devaluing its currency.
“The stronger dollar’s gonna make it harder for companies based in New Jersey to sell their goods abroad, so that could impact them. On the other hand, consumers are likely to get some cheaper prices when they go down shopping at Walmart, so things like that tend to balance out,” said Bernard McSherry.
McSherry heads New Jersey City University’s School of Business. He says lower oil prices can boost the local bottom line.
“If you have an extra $6 in your pocket every week because it’s cheaper at the gas pump – that money goes into your pocket and you spend it without thinking and it stimulates the economy,” he said.
On a larger scale, Wall Street’s also wondering about whether the Fed will finally raise interest rates. That would mean…
“The party is over, they’re pulling back the punch bowl, it’s the end of the easy credit orgy we’ve been enjoying for a while now and that’s not good for the stock market,” Calhoun said.
“I don’t think we’re going to be out of the woods in terms of volatility for a week or two,” McSherry said.
The falling market might spook investors, but analysts see a silver lining for consumers — more affordable Chinese imports and cheaper gas.