Wild, Wild Wall Street: What Went Down in the Stock Market This Week?!

Wild, Wild Wall Street: What Went Down in the Stock Market This Week?!

If you’re the kind of person who gets a kick out of roller coaster rides, you might not have been fazed by Wednesday's stock market meltdown—and journey back up again.

As for everyone else, the news might have been enough to send people into a panic.

What, When, Why: The Stock Market Meltdown in a Nutshell

The Dow Jones index dropped by about 460 points throughout the day, suggesting that it was headed for the largest one-day dip in the last three years. In the evening, the market rebounded, ultimately finishing at 16,141.74, or 173.45 points down.

As a result, the 10-year Treasury Note yield (which reflects a range of borrowing costs) dropped below 2% for the first time in 16 months, with investors seeking greater security in bonds.

But while bonds are generally perceived to be safer investments than stocks, one of the problems is that when everyone flocks to bonds, prices go up and yields ultimately go down.

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So what may have caused the market plunge in the first place?

According to MarketWatch, there are a few potential reasons, including worries over Ebola, dismal economic reports from Europe and Asia—and a weakened U.S. consumer economy. And some analysts are concerned that, after a year of rapid market growth, Wall Street is due for a “correction” of sorts.

The Anti-Panic Perspective: Keep Your Focus on the Future

As for how all this market volatility affects your personal finances, according to Rex Nutting of MarketWatch, American investors who don’t own more than a few shares of stock shouldn’t fret about the market volatility affecting the economy.

Brandie Farnam, a CFP® with LearnVest Planning Services, says one key to dealing with the inevitable swings in the market is simply to think about the long term.

"You can't control the headlines in the news, but you can control how you react," she says. "The tendency to stay calm instead of panicking generally translates into better returns over time."

RELATED: Back to Money School: 6 Ways Big-Picture Economic Trends Can Impact Your Wallet

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the people interviewed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.

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