The Dow Jones, S&P 500 and Nasdaq all fell sharply Tuesday morning, before a late-day rally continued into more modest gains on Wednesday. That's a trend that Triangle economists say we should expect to continue until a resolution with Iran is reached.
"When there's uncertainty, people say, 'I'm not going to hire somebody. I'm not going to invest.' You know, that's the greatest risk," said Chief Economist Gerald Cohen with the UNC Kenan Institute.
Cohen said recent "economic fog" from policies such as global tariffs has already had an influence on investors and their decision-making.
"I think there is this question about people just saying, 'this is the world we live in. We have to deal with this uncertainty," he said. "So we just, we need to think about, this is what our business environment is. If it looks good, we're going to invest -- or maybe that's less than we thought."
As for personal finances, local financial advisors such as Gray Pendleton with Pendleton Financial in Raleigh say now is the time to have a plan.
"Every year, there's some calamity that happens. But at the end of the day, the market continues to rise in the long run," Pendleton said. "So again, just make sure you have enough dry powder - enough cash - to weather your cash flow for several years, and the rest can be invested for long term growth. And you really don't have to worry about it so much now."
He suggested that younger investors, or those with a longer time horizon, try to avoid selling stocks if the market ticks down, since that makes those losses "real." But he added that this might be a good time for those nearing retirement to reduce risk in their portfolios.
"That doesn't mean you need to go out to cash, but if you have been invested in growth funds and benefiting from this technology boom we've been having and your 401K has gone up a lot, now's the time to start to reduce some of the risk in that portfolio the closer you get to retirement," he said.
But as investors react to rising tensions in the Middle East, Pendleton reminds clients with longer-term goals that there's no plan that can fully avoid periodic downturns.
"It's like, you go off on a boat out on the ocean. If you expect that you're going to have calm seas the entire time and you hit a storm, you might sink. But if you know and you're prepared for it, then you'll be able to weather the storm," he said.
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