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Stocks Unsettled By Political Drama, But Broad View Looks Better


It's been a wild ride for the stock market this week - a startling and dramatic plunge on Christmas Eve, a forceful comeback on Wednesday, a roller coaster ride Thursday and, finally, a quiet Friday, as if the market had exhausted itself. NPR's senior business editor Uri Berliner has been following the gyrations and joins us now. Hi, Uri.


ELLIOTT: So the big question on everybody's mind is, why has the stock market been bouncing around so much this week? Aren't traders supposed to be on vacation, like everybody else?

BERLINER: That's a question a lot of people are asking. This is normally a quiet time of year in the markets, but we've had a lot of political drama recently. We have the partial government shutdown, President Trump has been haranguing the Fed chairman Jerome Powell over raising interest rates, the resignation of the defense secretary, Jim Mattis. All of that may be a factor.

And also, most of the buying and selling these days - it's not done by human traders. It's automated and relies on computer models. So the buying and selling, a lot of it gets triggered by algorithms.

ELLIOTT: So all of this up and down felt a little scary at times, like there was this terrible fall for the market. Can you sort of help us put this in perspective? How bad is it?

BERLINER: Yeah, I get it when people have that pit in their stomach. You know, it feels pretty rotten if you see the Dow falling, like, 600 or 700 points in a day, especially when they're these sudden plunges. And it makes a lot of people nervous, understandably.

But if you step back, it's really a different story. The Dow is down about 7 percent this year. The S&P is about the same. Those aren't historically terrible numbers. And keep in mind that stocks have gone pretty much straight up since 2009. So if - say you started investing in 2009 or 2010, you're doing great. If you happened to start buying this past September, you're not doing so well. But overall, it's been a really good run in the stock market.

ELLIOTT: So this recent volatility - is that having an impact on the bigger economy?

BERLINER: Well, you know, overall, the economy is still doing really well. Growth is strong. Unemployment's at a nearly 50-year low. Shoppers - they spent very freely over the holidays. And so far, there's no evidence the stock market is putting the brakes on the economy. That could change, of course, if things get worse. Companies could get pessimistic. They could stop expanding so much and hiring new workers.

But it's good to keep in mind the American economy is a lot more than the stock market and, for now, still looks pretty good.

ELLIOTT: So as we're heading into a new year next week, should we be worried about another roller coaster week?

BERLINER: You know, we've been getting used to them for a while now, so who knows?

ELLIOTT: Thanks so much. That's NPR senior business editor Uri Berliner.

BERLINER: Thanks. Transcript provided by NPR, Copyright NPR.