Analysts: Stop worrying, stock market fall isn’t as bad as you think

The U.S. stock market took a dive as trading opened up Monday, following more problems with the Chinese stock market. But before you get too worried about your portfolio, analysts are urging calm.

“I don’t want to go nutty here, but this is part of what being an investor is. It’s also why, no matter what … we invest in diversified portfolios,” CBS analyst Jill Schlesinger told KIRO Radio. “Everything that is going on right now is actually kind of normal.

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“We have had quite a long time since our last correction, it’s been four years and we usually have them every year or year and a half,” she added. “So the fact that it has been a long time, it has made us a bit complacent.”

Schlesinger notes that people should not start likening Monday’s situation with past financial horrors, such as in 2008 and 2009.

“When you go back to 2008, that was scary because that wasn’t very normal to have a financial crisis with banks failing,” she said. “This is just run-of-the-mill fears about growth; jitters.”

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The Dow Jones industrial average plunged more than 1,000 points shortly after the open of trading, before regaining ground throughout the day. Despite rallying after the initial sell-off, the Dow ended the day 588.40 points, or 3.6 percent, lower.

The point decline was the eighth-largest ever, but on a percentage basis, it doesn’t make the top 10 declines for the index, according to S&P Dow Jones Indices.

The shock to the market was largely blamed on finances halfway around the globe.

“The brokers right now are pretty much centering on China,” said CBS reporter Jason Brooks. “We saw the Shanghai suffer its biggest one-day decline in eight years. That’s saying something.”

China’s main index plunged 8.5 percent recently. That’s the Shanghai index’s most significant decline since February 2007, the Associated Press reports. Many of China’s companies have struck 10 percent downside limits. While the Chinese market remains more than 40 percent above the level it was at last year, it has lost all of its gains for 2015.

“China’s stock market has just tanked over the last three months as the country’s economy has slowed down; perhaps even more so than Beijing is letting on,” Brooks said. And Beijing is making one move after another to try to prop up the economy. So far none of that is working. You got a lot of uncertainty out there. And when you’re talking about the second biggest economy, which has been the strongest growing economy in recent years, it’s a worry for the rest of the world.”

Brooks agrees with his CBS colleague, Schlesinger, and said that Monday’s market hiccup isn’t something to start getting too worried about.

“You got to keep in mind, it’s all relative,” he said. “It’s still not anywhere near the biggest percentage decline in the Dow’s history. And that is what you have to go by.”

And in the big picture, Schlesinger said, the United States is actually on a pretty good financial path.

“Go back to 2011, the last time we had a correction,” she said. “Since then, we’ve had millions of jobs created. The unemployment rate has gone down, the housing market has firmed up. U.S. households are in better shape, we’ve paid down debt, and we’ve saved more money.”

The Associated Press contributed to this story.