Welcome back fellow students! Just like you, I am slowly attempting to get back in to my school mindset, a very tall task for any student. Alarms are being turned on, forgotten organization skills are being dusted off and the nightmares of maintaining financial stability are back!
Yep, I just dropped the “f bomb” on you… finance, and all the thoughts that come with it- budgets, needs vs. wants, student loans, DEBT. Finance is a scary thing and something, whether you like it or not, that impacts your life on a constant basis.
As a finance major and an aspiring professional in finance, I have come to terms with these negative cogitations and twisted them into manageable puzzles that provide a sense of control when they are addressed. That is until a new puzzle piece is thrown into the mix.
Now, unfortunately, I do not have the magic answer to keeping a balanced budget while trying to keep up your college social appearances or making a foolproof plan of dealing with your student loan. But, what I can do and what I will do is summarize the current events surrounding the financial markets and the impacts that may be seen. And through this, hopefully keep you engaged in the world of finance and spark some sort of interest in it. So, let’s get started!
Despite all the political and societal issues that have risen since the Trump administration was elected into office, one thing that is for sure is the economic success from a stock market point of view.
The Dow Jones Industrial Average (a price-weighted index of 30 top publicly traded companies) has reached three different 1,000-point milestones in the new year: 20,000, 21,000 and 22,000. As of the market close on August 28th, the Dow Jones Industrial Average is up 10.35% on the year and the S&P 500 (a weighted index of 500 diverse publicly traded companies) is up 9.17%.
As the market gains have continued, calls for a market correction have gotten louder. A market correction can be defined as a decline of around 10% due to overvalued stocks, or in other words, overly optimistic past performances.
Considering the length of the bull market and the fact that historically, August and September are the worst performing months in the S&P 500’s history, some investors are becoming more skeptical. August has already seen two daily declines in the markets of more than 1% but they have rebounded both times.
Of course, there is no way to accurately make anything more than an educated assumption about what is going to occur in the markets but there are some events to look out for:
- The impact of Hurricane Harvey will continue to affect companies from the gas and oil, insurance and metals/materials sectors.
- Companies’ Quarter 2 earnings reports are continuing to be released this week which will directly affect the individual stock performance of the company depending on if they miss or beat their revenue and income expectations.
- Political issues always seem to make investors wary, so be on the lookout for market moves in response to anything from a President Trump tweet to tensions with North Korea.