Another day, another gut-wrenching drop-off on the stock market. In the opening hour of trading, the Dow, S&P 500, and the NASDAQ all plunged; at midday, all three were down by more than 4 percent. The proximate causes, according to Reuters: “data that pointed to a stalled economy” and “a report that regulators were scrutinizing the U.S. units of big European lenders.”
But as Chadwick Matlin wrote in this week’s New York magazine, it’s no longer clear what is driving the markets, other than a sense of uncertainty.
Investors had been the one group of shoppers with the confidence to buy. With nauseating speed, that’s been replaced with an unsettling truth: Nobody, the market included, has any idea what this economy will do next.
While the first half of 2011 saw stock prices climb despite evidence of widespread economic woe, now the markets seem as spooked as the rest of us, triggering massive swings on scant morsels of information that might have been happily ignored just a few months ago.
Rumors and hard data alike have always moved stock prices, but what’s new is how hysterically traders (and their machines) are reacting to each scrap of intel. Consumed with the same thought that’s been stalking many of us — what if 2008 was just the first dip? — the market seems determined not to get caught off guard a second time, bailing at each whiff of trouble. Then, upon realizing that it’s not, in fact, 2008 all over again, at least not yet, the market snaps back wildly. This is what it looks like when the market has finally admitted it doesn’t know the answers, except the most worrying one, which is that Washington won’t be goosing the economy anytime soon. It is manic until depressed, depressed until manic. The only thing that lasts is the anxiety. Which makes it a market for our moment — not the one we’d prefer, but the one that fits.