What Bear Markets Could Mean for Your Wallet

2 min read|Mar 11, 2020|fbtwitteremail

The stock market’s been feeling pretty emotional lately. Thanks, trade wars, coronavirus, and oil market drama. On March 11, it crossed a line. The Dow Jones Industrial Average — an index investors watch to gauge overall market performance — fell more than 20% from a recent high...officially signaling a bear market. Here’s what that could mean for your wallet.

Your stocks might be dipping low. The good news is that just because the Dow fell into bear territory doesn't necessarily mean it'll stay there. And the market's typically clawed its way back from these conditions in less than two years. So if you're investing for the long term (think: retirement), don’t panic.

You’ll probably hear the word recession a lot more. When the market’s down, people tend to feel more nervous about the economy. And less inclined to spend. That hits businesses where it really hurts: the bottom line. Even if there isn’t a full-scale downturn, there could be ripple effects on the job market. Because struggling companies are more into layoffs and hiring freezes than promotions and raises.

The Federal Reserve could be your hero, baby. Tough economic times are when America’s central bank (aka the Fed) really shines. One go-to move is cutting interest rates. That encourages people to spend and borrow more money. They've done it a few times lately, but some (including President Trump) hope they go even further.

Related: How the Federal Funds Rate Affects Your Wallet

theSkimm: After more than a decade of high highs, the market's swinging down hard. TBD what stock prices will do next. No matter what, it won't be all bad. If the Fed keeps rates low, you could get better terms on loans, like mortgages.