Hackett said the drop appears more dramatic because of a period of strength over the last two years, so it is not time to panic yet.
COLUMBUS, Ohio — On Tuesday, the Dow Jones tumbled for the second day in a row.
It comes amid the start of a trade war, as President Trump imposes tariffs on Canada, Mexico and China. All three countries announced plans to retaliate.
The situation is creating exactly the kind of uncertainty that causes the stock market to react, according to Mark Hackett, chief investment strategist at Nationwide Investment Management Group.
“I am not surprised. Frankly, it is a bit of a perfect storm,” he said. “You have a combination of growth scare and inflation fears, and a lot of uncertainty around D.C. is making investors nervous, so you are seeing a tremendous decline in investor sentiment and consumer sentiment as well.”
Hackett said the drop appears more dramatic because of a period of strength over the last two years, so it is not time to panic yet.
“A pullback after the strength we have experienced the last two years isn’t unhealthy or unexpected so you would expect on average a pullback of 10%-15% in a year. This is less than that,” he said.
Hackett said for long-term investors, it could present an opportunity to buy.
For those concerned about their retirement plans, Hackett said, “Stick to the long term. Retirement accounts are meant to be long-term focused.”
When President Trump announced tariffs during his first presidency, Hackett said the stocks reacted similarly then bounced back.
“Really, you want to stay vigilant. Stay informed but not be emotional,” he said. “Emotional trading is how you get away from your long-term plan and damage your long-term prospects.”
Dr. Daniel Karney, economics professor at Ohio University, is keeping an eye on how certain sectors will be impacted by the tariffs and the impact they could have on inflation.
“In places where U.S. importers do not have flexible options to buy other types of inputs for their goods, then they are going to eat all the price increase. So it is going to depend, ‘Are there good substitutes or not for those imported goods?’” he said.
While the tariffs are a likely suspect for the reaction in the stock market, Karney said it is hard to say for certain if the tariffs are causing the decline.
“Stock markets always go in cycles, and there are also lots of day-to-day, week-to-week fluctuations unless we see more data. There are suggestions about trends here but we need more data,” he said.
