Will the Stock Market Sag in September? [POLL/AUDIO]
The stock market dropped significantly in August, and many Garden State investors are wondering what’s going to happen in September.
New Jersey’s top economist believes there could be more bumps in the road.
“The Fed has been buying bonds in order to keep interest rates at extraordinarily low levels – and those low levels have stimulated the housing market and other parts of the economy, but they feel now that the economy may be strong enough to wean it off those low interest rates,” said James Hughes, dean of the Bloustein School of Planning and Public Policy at Rutgers University
He said stocks may take a significant dip if the bond-buying stimulus program is ramped down because “the stock market hates uncertainty, and the fact that the Fed really is doing a major course change here for the first time in four years breeds uncertainty.”
Hughes said in anticipation of the bond-buying stimulus program winding down, mortgage interest rates have already increased. There’s also been a reduction in housing activity across the nation. “The fear is the rising interest rates will lesson corporate borrowing, and have a negative effect on residential real estate.”
Another problem is the uncertainly in Syria.
“It could have a negative effect or it could have no effect,” said Hughes. “We may not know for a month or two how this is going to play out.”