Stock market reaction: Investment managers interpret Dow plunge

Monday's largest intraday point drop ever sparks lots of comments on what's ahead.
FEB 06, 2018

Money managers and financial advisers are sounding off on Monday's 1,175-point drop of the Dow Jones Industrial Average. Most are urging investors to take a long-term view, many mention that such a move was "overdue" and none are expressing surprise at the decline. But what now? Looking forward, expert opinion says watch out for what's happening in Washington this week and consider whether this is the right entry point for that cash sitting on the sidelines. Here's a roundup of market commentary released late Monday or Tuesday morning, when the market quickly came back from giant losses to close the day up 567 points. ​ (More: 10 worst days ever for Dow Jones)

"For the time being, this looks like a healthy correction in markets, rather than the onset of a bear market. Depending on the depth of the dip that we see in asset prices, this selloff could create an attractive entry point for investors to take more risk."

— Paul Eitelman, multi-asset investment strategist at Russell Investments

"Markets can and will act irrationally at times, sometimes for extended periods. While an 8% drop in the markets is certainly noteworthy, we are still cautiously optimistic that due to the strong global economy, this market will stabilize."

— Bank of America Merrill Lynch Global Research report

"The likely path ahead is positive given the stability of macroeconomic data, supportive global growth, and positive earnings sentiment globally. However, the low volatility witnessed last year was anomalous, so expect more idiosyncratic episodic volatility—a trend commonplace for a market in the later stages of the cycle—as the year progresses based on changes in monetary and fiscal policy."

— Matthew Bartolini, head of SPDR Americas Research at State Street Global Advisors

"Investors had their first taste of a mini market correction for the first time in a while … Looking ahead over this next week and further into the quarter, there are palpable risks. The political circus in Washington is still far from over, as is the uncertainty that Congress and the White House can agree on a budget package that will pass through both parties with minimal grandstanding. There is a point at which investors and voters will get tired of 'kicking the can down the road.'"

— Tom L. Stringfellow, president and chief investment officer, Frost Investment Advisors

"A market correction like this one was inevitable and we've been warning our clients to expect it for several months. Now that it's upon us, it's vital you stay focused on your long-term goals and remain consistent with the asset allocation that is appropriate for your situation."

— Ric Edelman, founder and executive chairman of Edelman Financial Services

"We remain constructive for equities, due to the synchronized global recovery, which we expect to underpin strong earnings growth. Given that until recently, investor sentiment was near record highs, we think that some sort of correction was indeed overdue. For stock pickers, such phases can certainly bring opportunities."

— Deutsche Asset Management commentary

"Inverse and leveraged exchange-traded products are not ETFs, and they don't perform like ETFs under stress. That's why iShares does not offer them. BlackRock strongly supports a regulatory classification system that would label levered and inverse ETPs differently than plain-vanilla ETFs in order to clarify for both regulators and investors the risks associated with those products."

— BlackRock statement

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