Why Investors Aren't Losing Sleep Over Market Drops
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What recent market volatility and episode focus are introduced at the start?
Your Money Briefing. Money and market stories from The Wall Street Journal.
I'm J.R. Whalen in New York. The recent downturn among tech stocks and the wild swings in the broader market aren't for the faint of heart, but some investors are staying in the market for the long haul. We'll explain why in a moment. First, these money headlines. The Wall Street Journal heard on the street team says evidence is mounting that consumer lenders are slowing their credit card, auto, and other loans. Monthly data from the Federal Reserve shows that total consumer loans outstanding rose at a seasonally adjusted annualized pace of just 3.3% in February. That's down from 4.9% in January and 6% in December. There are two explanations for this. First, lenders have grown more cautious over the past year in response to rising delinquencies and defaults on their loans.
Second, consumers may now be paying down loans that they accumulated over the past few years strong credit growth and consumers are saving more. Heard on the street says it also means that modestly rising wages and lower taxes won't spur consumer spending as strongly as investors appeared to believe last year. Americans are spending more at the pump than they have in recent years. Prices could rise even higher just as drivers hit the road for family vacations. Some analysts say this summer will likely be the highest average price at the pump since 2014. And crude prices have jumped thanks to continuing production cuts by major exporters. As a result, gasoline is also becoming more expensive.
What consumer credit and loan trends are highlighted in the money headlines?
According to the U.S. Energy Information Administration, average regular retail gas prices reached $2.70 a gallon last week. That's the highest since 2015. And Congress's nonpartisan scorekeeper is predicting wider budget deficits and somewhat stronger economic growth over the coming years due to recent legislation to cut taxes and boost government spending. The Congressional Budget Office on Monday said the federal budget deficit is will total $804 billion this year and exceed $1 trillion a year starting in 2020, up from fiscal 2017's deficit of $665 billion. This is your money briefing from The Wall Street Journal. Welcome back, everybody. The recent rout in tech shares in the S&P 500 to the tune of 6.5% just in the last month has stopped everyone from investors to those who watch Wall Street in their tracks.
But there are still large blocks of investors unfazed by the recent volatility and sell-offs, and Wall Street Journal Markets reporter Akani Ohtani joins us to explain their thinking. So, Akani, the recent series of market gyrations and steep drops, not only in the tech sector, but in the broader market, have tested investors' internal fortitude. But some folks you spoke to say, damn, the torpedoes were hanging tough.
Yeah, that's exactly right. My colleague Lisa and I, we wanted to see what the reaction was like basically off of Wall Street. I mean, just getting out there and talking to individuals, especially because a lot of these tech names that had been hit are really household names at this point. I mean, we're talking about companies like Facebook, Amazon, Netflix, Google. Everybody knows them. When you hop in a cab, it's the stock that people want to talk to you about when they find out that you cover markets. So we thought, you know, maybe this market pullback is going to freak people out more than prior pullbacks had. And it turned out that wasn't really the case, actually. I mean, a lot of individuals still see reason to be pretty optimistic about big tech companies.
They like what they're seeing in terms of their earnings. And they also have a little bit of skepticism in terms of, you know, whether we're going to actually see tighter regulations hit the industry.
But they kind of are saying that they've seen this movie before. They're not getting too freaked out or too unnerved by the turmoil and the pullback. And they see it really as a storm they can ride out.
Yeah, I mean, especially at this point, we've seen volatility come back to the market.
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