The stock market closed out a week of intense losses with the Dow Jones falling more than 750 points Friday, entering bear market territory amid a wave of investor fears.
At time of writing, the index had, at its lowest point, fallen more than 2.7% during the day to around 29,300 points, with the Nasdaq and S&P 500 down by 2.7% and 2.64% respectively at time of writing. With the Dow Jones officially falling more than 20% from its recent peak in June, stocks have entered “bear market” territory, according to CNBC.
The Nasdaq was down by 30.92% this year, with the S&P 500 down 22.98% this year, as of close of business yesterday, according to data from MarketWatch.
“Stocks were overvalued because their nominal price has been fueled by the inflation of the Federal Reserve,” Heritage Foundation economist E.J. Antoni told the Daily Caller News Foundation. “As soon as the Fed took away the punch bowl… what happened? Stocks immediately took a nosedive and are continuing to do so, because the only thing that has been fueling this economic recovery hasn’t been real growth, but again, money creation.”
After wavering early this week as investors awaited the Federal Reserve’s Wednesday announcement of a third interest rate hike in just four months, stocks tumbled, with Goldman Sachs warning clients that investors are preparing for recession and slashing its expectations for the S&P 500 stock index by 16%.
Federal Reserve Chair Jerome Powell has been clear that he is willing for there to be some economic “pain” in order to combat inflation, even as the Biden administration touts its economic record.
Antoni noted that major market moves such as this are typically driven by the “institutional investment class,” and that individual retail investors typically got crushed unless they had “incredible foresight.” Unless retail investors had an immediate need to sell, Antoni cautioned against doing so, urging retail investors to weather the panic.
“Now we’re faced with the reality of having to do it the hard way, of having to actually grow the economy and not just grow the money supply.” Antoni said.
Originally published by The Daily Caller. Republished with permission. Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.
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