Sally Griess has been leery of investing in the market since technology stocks led a market rout starting in 2000.
Wall Street’s downturn in the past month has done nothing to rebuild her confidence.
“I was a lot more aggressive before,” said Griess, a 54-year-old accountant. “It is too unstable. I’m not comfortable with it. I plan to retire in another 10 years, and now I don’t have to have a heart attack every day I look at market results.”
Meanwhile, credit-card, mortgage and auto-loan interest rates have been rising for the past 18 months and are beginning to pinch pocketbooks.
Homeowners with adjustable-rate mortgages, in particular, are clamoring to refinance, said Pete Lansing of Universal Lending Corp. in Denver.
Rising interest rates, falling stocks and persistently high energy prices have some consumers concerned. But experts say it is far too early to panic.
“This is definitely a market correction,” said John L. Claxton, vice president of RBC Dain Rauscher Inc. “Whenever you have both economic conditions and market conditions that are going through transition from a very-high-growth environment, you have uneven economic results and uneven stock- market results.”
Two years ago, the Federal Reserve launched a steady campaign of interest-rate increases to address fears of inflation. New Federal Reserve Chairman Ben Bernanke spooked Wall Street last week by saying the central bank will remain vigilant in fighting inflation.
That has led to interest-rate increases in a variety of consumer products. In the past year, average interest rates for variable-rate credit cards have increased 1.7 percent, from 12.07 to 13.77 percent. Since January 2005, average interest on a 30-year fixed mortgage has risen from 5.74 percent to 6.69 percent, while the rate on a five-year new-car loan has climbed from 6.63 percent to 7.51 percent.
Lou Barnes, owner of Boulder West Financial, said changes in shorter-term interest rates shouldn’t be a big threat to consumers. He said consumers have already grown accustomed to the changes. The small interest-rate increases of recent months won’t inflict major damage on most people’s personal finances.
Neither will stock-market fluctuations like those that have occurred over the past few days, said financial consultant Sam Jones. Even so, he admitted he had a tough day Thursday, as the stock market first plunged and then recovered.
“For those of us who live and die on a five-minute chart, this has been an Alka-Seltzer day for sure,” said Jones, president of All Season Financial Advisors in Denver. “I am surprised I have any hair left.”
After a seesaw day, the Dow Jones industrial average finished up 7.92 points, or 0.07 percent, to 10,938.82. The Dow lost almost 330 points from Friday through Wednesday.
Jones tells the retirees who are his risk-averse clients “that they should fasten their seat belts.”
He also called the past week’s plunge a correction and said it could be the kickoff to a larger downturn.
“But downturns don’t happen in a linear fashion. We will get a rebound out of here,” he said before the market closed.
Jeff Thredgold, an economist with Vectra Bank Colorado, said he remains optimistic that the market will finish the year strong.
Working people who are depending on the investments they have made in their 401(k)s shouldn’t be concerned, he added. In fact, “They should take a chuckle at what is going on. You are seeing the emotionalism of the markets.”
The Associated Press contributed to this report.
Staff writer Tom McGhee can be reached at 303-820-1671 or tmcghee@denverpost.com.
Staff writer Kristi Arellano can be reached at 303-820-1902 or karellano@denverpost.com.
