Suzanne Bradshaw, a financial adviser with Edward Jones, said she spent most of Monday morning in her Eldersburg office trying to alleviate her clients' fears due to an initial 1,000-point stock market drop that eventually settled at 588 points down at the market close.
"Some people have the jitters, so I've been talking them off the ledge," Bradshaw said. "But some clients understand there are opportunities out there and want to put more money out."
In just a matter of minutes following the market's opening bell at 9:30 a.m. Monday, the Dow Jones Industrial Average, which opened at 16,459.75, dropped more than 1,000 points, reaching a low of 15,370.33. The Dow Jones is a stock index that measures the value of a section of the market.
In the hours following the 1,000-point plunge Monday morning, the Dow Jones began to climb, clawing its way back to 16,344.50 around 1 p.m. before closing the day at 15,871.28 — a 588.47 point and 3.58 percent loss. This followed a series of drops last week, during which time the Dow Jones dropped another 1,000 points from Aug. 18 to Aug. 21.
The largest single-day Dow Jones drop in history came on Sept. 29, 2008, when it dropped 777.68 or 6.98 percent.
The Standard & Poor's 500 index also fell sharply shortly after the opening bell, entering "correction" territory — Wall Street jargon for a drop of 10 percent or more from a recent peak. The last market correction was nearly four years ago. The S&P 500 index slid 77.68 points, or 3.9 percent, to 1,893.21. The Nasdaq composite shed 179.79 points, or 3.8 percent, to 4,526.25 points. The three indexes are down for the year.
The slump — part of a global wave of selling triggered by the slowdown in China — reflected uncertainty among investors over where to put their money when the world's second-largest economy is in a slide.
U.S. Treasurys surged as investors bought less risky assets. Oil prices fell. But investors also saw opportunity, moving fast and early to snap up some bargains. That helped trim some of the market's earlier losses.
The sell-off triggered worries in corporate boardrooms, in government capitals and among ordinary Americans young and old who have been saving for retirement or a down payment on a house.
"There is a lot of fear in the markets," Bernard Aw, market strategist at IG, told the Associated Press.
Werner Mueller, retirement plans manager for Carroll County Government, said the call volume to his office from employees concerned about their 401(k) investments has not risen due to Monday's drop and the dips of the previous week.
"Believe it or not, the drop the last couple weeks has not driven up calls all that significantly so it appears employees are riding it out," Mueller said.
Most of the county's employees are well aware these retirement funds will go through gains and losses, Mueller said.
"Even if [their funds] are allocated fairly aggressively, they realize this is a short-term correction they are going through," he said. "Employees are not panicked by any stretch but it's definitely been a rough stretch."
A correction, Mueller said, occurs when an index such as the Dow Jones goes down 10 percent from its previous high. If it falls 20 percent, Wall Street labels it a bear market, he said. The Dow Jones' 52-week high was 18,351, so the 15,871.28 end-of-day value on Monday represents about a 13.5 percent drop.
While this has caused many investors to worry, Bradshaw said she has advised her clients that this is an opportunity to invest more, not sell their shares. With any retirement plan, investors need to understand long-term plans will undergo ups and downs and this is not necessarily something to fear, she said.
She has also planned a workshop at the Eldersburg branch of the Carroll County Public Library at 6:30 p.m. Sept. 1 to answer any questions attendees have. During the workshop, Bradshaw will address the current issues, including Monday's stock drop, its causes, and what to expect from the stock market going forward, she said.
"Investors should take a step back and realize [their] retirement fund is still long-term money," Bradshaw said. "Your portfolio should be balanced according to a risk level you are comfortable with and no one else's."
According to Mueller, the recent stock market decline may be "a bit of a blessing" for younger employees.
"It will enable them to buy shares of a mutual fund at lower prices," he said. "With someone that young with that sort of time horizon, this is good."
The drop began in China, the world's second-largest economy, Bradshaw said. The country is in the midst of developing a new economy, she said, and while its success strengthens the American market, its setbacks — especially drastic ones — can have enormous consequences in the U.S.
China is well-known for purchasing commodities, such as oil and recyclables.
"What's going on in China, with its emerging markets, and commodities and oil prices, everything is linked," Bradshaw said.
Edward Jones, an investment firm that assists individuals and businesses in achieving their long-term financial goals, has lowered its expectations of the market because of China's emerging economy, Bradshaw said, and predicts continued volatility but not such drastic fluctuations.
Historically, Mueller said, when the market goes up it tends to do so gradually, but on several occasions when it has gone down it has done so rather dramatically.
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"In just a matter of weeks, we are back to 18-month lows, so they are about the same they were in early 2014," he said. "It's basically wiped away months of gains in a matter of weeks."
Mueller reiterated Bradshaw's comments, and said that while the stock market can be volatile, aggressive investing at an early age — particularly at low points — will help to ensure investors are prepared not only for retirement but the years ahead.
"What most employees need to realize is not only will you retire in your 60s but it's not unusual to live until you are in your 90s," he said. "So you're not only saving for retirement but also the 30-year window after retirement so it does make sense to invest predominantly in the stock market. Not exclusively; but the majority should be in the stock market."
The Associated Press contributed to this story.