Market update: Rate hike disrupts stock market

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This week in the markets

  • Another Facebook scandal emerged on Wednesday, accusing the social media giant of sharing users’ data without consent.
  • The Federal Reserve hiked rates for the fourth time this year, pushing the three major US stock indexes to new 2018 lows at Wednesday’s close.
  • The US stock market is having its worst start to December since the Great Depression.

Yet another facebook scandal emerges

On Wednesday, The New York Times reported that Facebook allegedly gave large technology companies, like Microsoft, Netflix, Spotify and Amazon, special access to users’ data without anyone knowing. The scandal includes giving Microsoft’s search engine Bing access to see users’ friends lists without the users’ consent, letting Netflix and Spotify read users’ private messages, and allowing Amazon to gather users’ names and contact information.

Facebook has denied that it gave companies user data without the users’ permission. However, the social media giant does acknowledge that these companies (and others) have access to Facebook user information, but only if the users have opted in to utilize their Facebook accounts on third-party platforms. It sounds like it might be time to actually read the terms and conditions before clicking “agree!”

The Fed hiked interest rates, unsettling most major market indexes

US stocks were down on Wednesday after the Federal Reserve raised its key interest rate for the fourth time this year by one quarter of a point. The Fed increased the discount rate, which is the minimum interest rate set by the Fed for lending to banks. By doing this, the Fed can influence the pace of economic growth. It’s important to understand that when the Fed raises the discount rate, banks also hike the federal funds rate and the rates they charge to consumers for things like credit cards, lines of credit, and mortgages — so borrowing costs increase across the economy.

Investors seemed discouraged by the announcement, as the Dow Jones Industrial Average (DJIA) fell 1.49%, the Standard & Poor’s 500 Index (S&P 500) declined 1.5%, and the NASDAQ dropped 2.1% at Wednesday’s close. All three major indexes closed at their lowest level so far this year.

Stocks have worst December since Great Depression

It’s true the stock market has suffered so far this month, and most major indexes are experiencing their worst starts to December since the Great Depression. The steep decline is making some investors nervous that earnings growth for most companies have peaked for the year. They’re also worried that the economy could slow in 2019 because of continued trade tensions with China and further potential rate hikes by the Federal Reserve. It’s important, however, to maintain composure during volatile markets, like those experienced so far in December.

Volatility like this can be unsettling, but it’s normal. The beauty of long-term investing is that the specifics of any market episode matter less than maintaining a steady course in a balanced portfolio, like your MoneyLion Investment Account. MoneyLion has constructed a balanced portfolio that is tailored to your risk preferences and designed to try to weather market volatility. So stay calm and invest on!

And now for your weekly Lionomics wrap-up. ?

Lionomics: Finance made easy

This week in Lionomics, we discussed bull markets. The bull has a significant meaning for investors and represents a time during which share prices are rising. Find out how to identify a bull market and how investors can take advantage of it.

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