Dow plunges 832 points, ASX slumps, Trump blames the Federal Reserve, and why I’ll be adding money to my portfolio today

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Overnight on Wall Street the Dow plunged 832 points or 3.15 per cent, its biggest loss since February. Worse, the Nasdaq sank 4.1 per cent, it’s worst showing for seven years. The ASX 200 plunged below 6,000 at the open

Investors continued to be spooked by rising interest rates, and the relative attractiveness of so-called risk-free bond yields of 3.2 per cent versus equities.

Adding to investor’s concerns was the¬†International Monetary Fund (IMF) cutting its global growth forecasts citing trade tensions between the US and its trading partners, otherwise known as Trump’s Tariffs.

The IMF says the global economy is now expected to grow at 3.7 per cent this year and next year, 0.2 percentage points from an earlier forecast.

Naturally, President Trump was taking none of the blame, telling reporters he blames the Federal Reserve for raising interest rates, suggesting it is responsible for today’s stock market sell-off.

True to form, Trump is quick to claim credit for economic growth and the rising stock market, and even faster to blame others when things move against him.

Today’s sell-off has more than a sniff of panic about it. Bond yields were virtually unchanged from the day before, so it’s hardly as if the market was reacting to some overwhelmingly negative news or data.

Panic-selling is nothing new. What is new is volatility.

We haven’t seen many stock market corrections throughout this long bull market, so we forget what they are like. Yes, they are painful. But an inevitable part of stock market investing.

Rather than selling into the panic, and the lower share prices, use this as an opportunity to add some money to your portfolio. I will be.

Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at brucej@thecapitalclub.com.au