STREAMING NOW: Watch Now

Global stock market turmoil: What's going on?

Stock markets around the world are falling, driven by fears coming out of the U.S.Major indexes in New York, T...

Posted: Feb 6, 2018 1:45 PM
Updated: Feb 6, 2018 1:45 PM

Stock markets around the world are falling, driven by fears coming out of the U.S.

Major indexes in New York, Tokyo and London have suffered steep losses. And a key gauge of investors' fear spiked to its highest level in more than two years.

Analysts are trying to figure out if it's a short-term correction for markets that had recently hit record highs or a sign of deeper concerns.

Here's what you need to know:

What's happening?

Markets in Asia and Europe are falling Tuesday. Japan's Nikkei plunged 4.7%, Hong Kong stocks plummeted 5.1% and London's FTSE 100 was down nearly 2%.

Those drops follow a harrowing day for investors on Monday in the U.S., where the Dow plummeted 1,175 points, or 4.6%. It was the index's biggest ever point decline in a single day.

Related: Market fear is back in a big way

Tuesday looks set to be another tough trading session on Wall Street. Dow futures were swinging wildly ahead of the open.

Why is it happening?

There are a bunch of concerns fueling the selling.

One is the worry that the U.S. Federal Reserve will raise interest rates faster than previously expected. That was triggered by U.S. jobs data on Friday that showed wage growth is picking up -- which could mean faster inflation.

When interest rates rise sharply, stocks often fall. Higher rates can eat into corporate profits. Rising rates and inflation can also cause ructions in bond markets.

Related: This is why the Dow is plunging

Experts have warned repeatedly in recent months that both stock and bond markets were getting too hot. And some analysts say the current losses could even be a good thing.

"This correction is a healthy development for the markets in the long run, and the equity bull market, while bloodied, is not broken," Scott Minerd, global chief investment officer at Guggenheim Partners, wrote in a research note Monday.

Why are U.S. issues affecting global markets?

The U.S. is the world's largest economy and home to the biggest financial markets on the planet. The dollar is the currency of reference for investors around the world.

What happens on Wall Street almost inevitably ripples around the globe. Markets in other global financial centers, like London and Tokyo, are particularly sensitive to it.

But more closed systems, like China, are often less heavily affected. Stocks in Shanghai are down 2.2% since Thursday compared with 8% in Tokyo.

How worried should you be?

It depends who you ask. But assuming the current stock market declines are a short-term drop rather than a sign of deeper problems, financial experts generally say you shouldn't panic.

Even if stocks continue to decline over the next few days, market corrections are normal, Greg McBride, Bankrate.com's chief financial analyst, said Monday.

Related: The Dow just lost 4.6%. What does that mean for you?

The U.S. and other major economies are growing healthily at the moment.

"I caution investors to really be patient here and look for opportunities and not to panic," Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, said on CNN. "It's really not a time to be worried about the long-term prospects of the market."

What does this have to do with Trump?

The plunging stock market is awkward for President Trump. He's frequently taken credit for the big run-up in U.S. share prices during his presidency.

"It's a risky game to talk about the markets. But it seems like Trump is going to live or die by the stock market," said Greg Valliere, chief global strategist at Horizon Investments.

The White House said in a statement that Trump was focused on "our long-term economic fundamentals, which remain exceptionally strong." The statement cited strengthening economic growth, low unemployment and increasing wages for workers.

Related: Market mayhem puts Trump in a tough spot

But some of Trump's policies also feed into the concerns weighing stocks at the moment.

The recent huge tax cuts for businesses were initially cheered by investors. But they also prescribed expensive medicine to an already healthy U.S. economy.

Stimulating a strong economy could be too much of a good thing. Morgan Stanley warned in the fall that "overheating" the economy may backfire by causing stocks to "boom then bust."

And the current stresses in the bond market reflect the concerns that the U.S. Treasury needs to take on more debt to pay for the tax cuts.

-- Matt Egan, Sherisse Pham, David Goldman and Kathryn Vasel contributed to this report.

West Lafayette
Cloudy
74° wxIcon
Hi: 75° Lo: 71°
Feels Like: 74°
Kokomo
Cloudy
71° wxIcon
Hi: 73° Lo: 70°
Feels Like: 71°
Rensselaer
Cloudy
66° wxIcon
Hi: 69° Lo: 66°
Feels Like: 66°
Fowler
Cloudy
74° wxIcon
Hi: 70° Lo: 66°
Feels Like: 74°
Williamsport
Cloudy
68° wxIcon
Hi: 72° Lo: 68°
Feels Like: 68°
Crawfordsville
Cloudy
70° wxIcon
Hi: 73° Lo: 69°
Feels Like: 70°
Frankfort
Mostly Cloudy
72° wxIcon
Hi: 73° Lo: 70°
Feels Like: 72°
Delphi
Cloudy
68° wxIcon
Hi: 73° Lo: 70°
Feels Like: 68°
Monticello
Cloudy
68° wxIcon
Hi: 72° Lo: 71°
Feels Like: 68°
Logansport
Cloudy
66° wxIcon
Hi: 72° Lo: 68°
Feels Like: 66°
More quiet weather with cooler, drier air
WLFI Temps
WLFI Planner

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 751242

Reported Deaths: 13795
CountyCasesDeaths
Marion1032931788
Lake556911009
Allen41692692
St. Joseph36990565
Hamilton36588417
Elkhart29398461
Tippecanoe22901226
Vanderburgh22556400
Porter19356325
Johnson18471389
Hendricks17682317
Clark13226195
Madison13149344
Vigo12614253
LaPorte12419221
Monroe12207176
Delaware10966198
Howard10321225
Kosciusko9630121
Hancock8576146
Bartholomew8169157
Warrick7860156
Floyd7811180
Grant7242179
Wayne7162201
Boone6966103
Morgan6761141
Dubois6218118
Marshall6209116
Cass6016110
Henry5900110
Dearborn589878
Noble581488
Jackson509076
Shelby501496
Lawrence4742122
Gibson444894
Clinton442355
Harrison441875
DeKalb439885
Montgomery438090
Whitley406543
Huntington402681
Steuben400159
Miami395269
Jasper388054
Knox375991
Putnam372960
Wabash361983
Ripley347170
Adams345555
Jefferson335886
White331953
Daviess3033100
Wells295281
Decatur289992
Greene286885
Fayette284864
Posey273835
LaGrange273072
Scott270156
Clay267148
Washington246036
Randolph244783
Jennings235349
Spencer234531
Starke228058
Fountain220948
Sullivan214643
Owen211858
Fulton202942
Jay200932
Carroll193620
Orange188255
Perry187237
Rush175926
Vermillion174844
Franklin170335
Tipton166246
Parke149416
Pike138234
Blackford136232
Pulaski120647
Newton113936
Brown104243
Crawford102516
Benton101714
Martin91715
Warren84015
Switzerland8148
Union72810
Ohio57911
Unassigned0420

COVID-19 Important links and resources

As the spread of COVID-19, or as it's more commonly known as the coronavirus continues, this page will serve as your one-stop for the resources you need to stay informed and to keep you and your family safe. CLICK HERE

Closings related to the prevention of the COVID-19 can be found on our Closings page.

Community Events