Stock Market Information

One of the biggest blows to the stock market of late have been related to the drop off in consumer spending, which drives a good portion of the growth of the economy. Unfortunately in recent years much of consumer spending has been driven by debt, with credit card balances and other types of credit constantly on the rise.

If you happen to be one such consumer who’s running into debt troubles, you’re not alone, and there are solutions out there. There are a number of debt consolidation services that will help negotiate with creditors and organize your payments into a manageable sum each month. Debt counseling is an important service for consumers that are hitting the end of the rope as the easy credit era is rapidly coming to an end.

There’s no question that today’s markets are skittish at best and horribly irrational at worst. Every bit of doom and gloom news sends investors running for the exits even as money poured in just a day before. As a result we’ve seen huge swings day in and day out, and the couple hundred point drop we’ve seen in the Dow so far today seems par for the course given the past few weeks.

Today’s stampede for the exits is due to retail sales data, which came out much worse than expected. It’s not just investors who are scared, everyone is. As a result we’re much less likely to step up and purchase anything. From getting an auto insurance quote to putting a recent purchase on a credit card, we simply don’t have the spending capacity that we used to, and I believe that will reflect upon the upcoming holiday season as well.

Unfortunately many investors tend to misjudge their appetite for risk until it’s too late. Many consumers will say that they’re willing to accept volatility, especially in the stock market, in good times. When the chips are down however and portfolio values drop 20% or more within the span of a few months, many investors balk and flee to the safety of other securities. Listed below are a few instruments that those looking for safety will flee to:

• Treasuries: Treasury notes and bills are debt securities provided by the US government, allowing Uncle Sam to borrow the money from investors with the promise to pay it back within a specified time frame. If you happen to bail out when everyone else is, you’ll see less interest being paid as more demand is present for the safety of government securities, as we see with our current economic scenario.
• High Yield Savings Accounts: Pioneered by banking institutions like ING, many banks now offer higher yield accounts for consumers to place emergency money that they may need. This allows them to earn some interest while also receiving FDIC insurance on their money and supreme liquidity. With the recent boost to FDIC coverage from $100,000 to $250,000, it’s likely that many more investors will flee to such accounts to wait out the market volatility.
• Certificates of Deposit: These are notes that banking institutions sell to customers in order for them to build a capital base and in exchange promise a specified rate of return to the consumer. These tend to pay higher interest due to the loss of liquidity, as certificates can not under most circumstances be easily converted back into cash until the specified time frame has expired.