Portfolio Managers warn Investors Against the Potential Volatility of the Market


Dow Jones Industrial Average has not made much difference from where it stood at the beginning of the month. In such a scenario, money managers do not see much changing in the market and this situation is expected to continue until Wall Street receives further information from both the Federal Reserve and the White House.

Portfolio managers are of the opinion that uncertainty is the obstacle that markets are facing at the moment. The market is going sideways and it is a time when certainty is the most craved factor. The current scenario and monetary policies, however, do not offer the luxury of certainty to markets.

Uncertainty in markets affects investor confidence

With the constant changes being brought about by the Trump administration, 'certainty' seems like a far-fetched dream as of now. Portfolio managers have warned investors of the challenges in the near-term. Amidst talks about inflation and the 10-Year Treasury Note yield jump, markets may soon be caught up in correction.

Predictions made by analysts are proving to be right as evidenced by the 10% drop in the Dow Jones Industrial average on February 8. The very next day, the index faced a correction situation and closed out.

As of now, the market is following the 'wait and see' policy with Trump proposing tariffs on steel and aluminum imports. This could potentially start a trade war which could further worsen the state of the market. Analysts believe that there is the slightest chance of a recession happening yet again.

The Federal Reserve's decision to hike interest rates and a potential policy error has further caused disparities in the market.

The new chairman of the Federal Reserve, Jerome Powell, will be talking about the future of the economy in a press conference later this week and he is also expected to outline the number of times the interest rates will be hiked this year.

The market is currently speculating the prices around the expected interest rates issued by the Federal Reserve. 2018 seems to be a volatile year for markets and investors are questioning the current state of the market.

Despite the hue and cry, many financial advisers have chosen to hope for the best and refuse to be daunted by the current uncertainty in the market. Many still hope that the trade war is simply a news that will die down in some time.

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