November 02, 2022
The S&P 500 fell more than 7% last week after the Federal Reserve raised rates to their highest point since the 2008 crisis. It came with a warning that interest rates would settle into a higher point than originally thought; the Fed now expects interest rates to hit 4.6% by the middle of next year before dropping in 2024 and 2025.
That news unsettled scores of investors, who took their cash and headed for the bank. Billions of dollars left the market and headed for the place that offered the highest interest rate, with the promise that their money will make a nearly risk-free 3% in a high-yield bank account.
Naturally, people are upset about the market’s performance. Retirement and brokerage accounts across America have taken substantial hits and people want easy targets to blame. The reality is much more complicated, though: markets are risky, fickle things. They correct all the time.
You don’t have to believe us, you can look at every recession and correction leading up to the COVID-19 pandemic.