SOUTH BEND - After the stock market bell rang on Monday it all went downhill from there, literally. The Dow fell below 11,000 for the first time since November. This was the first day of open trading since Standard & Poor dropped America’s credit rating, but an economist at the University of Notre Dame said don’t be too quick to point fingers at that rating for the fall in numbers.
"It's not one hundred percent clear what’s driving that,” said University of Notre Dame Assistant Professor of Economy Eric Sims.
Sims said the reason is most likely a combination of events. "I think really what we're seeing is a continuation in the past couple weeks, which is just fears of a double dip recessions, and fear of what's going on in Europe,” said Sims. “Just fears of a weak economy, that’s driving the market lower.”
Sims said Monday’s dip adds to an already rough few months for the average citizen. “If you have any exposure to bonds and equity markets, which almost all of us do, anyone that has 401K, anyone that has a retirement account, has really been beaten up in the last 3 months,” said Sims.
Sims said he knows investors have an urge to pull their money out of the stock market as soon as possible. “Everybody has the tendency to want to sell when things tank, but doing so is usually a very bad strategy,” said Sims.
He said just try to wait and double check your money is going. "Ride out the storm. Check the way your portfolio is balanced. Try to have a healthy mix between domestic equity and international equity, bonds, cash,” said Sims.
Sims said it should be obvious that the U.S. economy isn’t in good shape. "I think it’s clear, just if you look at the employment picture, that things are not really good right now,” said Sims.
He said traders are somewhat weary of what the future holds for the U.S. economy. Sims said, “I think today is a particularly strong indication of what's been going on. Which is just those investor are very queasy about what’s going on in the U.S. economy right now, but also what’s going on longer term.”