what is the reason of the sudden decline in the share market?

Answer 1

terror attack, like 9/11

Answer 2

There's rarely just one reason.

What was the reason for the stock market crash in 1929? They're still writing about it and coming up with reasons.

What is the reason for fluctuation in prices? In the short term, it's human emotion, primarily fear and greed. In the longer term, it's supply and demand.

You listen to too much media hype, and actually think you are informed and just missed a show or something, like someone really has "THE" answer. I meet investors that read the Wall Street Journal cover to cover and think they are informed.

The stock market is a predictor of the economy six months from now. And six months from now, they will have figured out what happened today. But right now, nobody has a crystal ball.

You don't have to know "Why" or "What" or "the reason." I would say you can't possibly know that. You ask ten economists or traders, or "experts" and you'll get 11 answers. What good will that do you? You going to make decisions based on a newscaster? Just follow the price and volume of the here and now.

Sometimes there are no reasons. The market goes where it wants. It is a living breathing thing. The media is just entertainment. If they had the answers, we wouldn't have any newscasters -- they would all be traders.

Answer 3

The joke answer is: "More Sellers than Buyers!"

The more serious answer is that investors are less comfortable with the future prospects for stocks than they are with other investments, like bonds or money markets.

The stock market is a parking place for money that is valued based upon estimations of future earnings and growth and Investors confidence in such.

Thus, if you have a choice to park money in stocks expected to yield 10%, with some serious risk of loss or to park your money in governement bonds guaranteed to yield 5%, you might choose bonds instead of stocks. If yields go up they will be more appealing to investors (at least some) than stocks.

This year, going into the market top, government bond yields have risen (see chart link below). Some time in May it was apparently enough to get folks to start shifting money from stocks into bonds (note how yields fell as bonds rose since mid-may).

To make matters worse, the Federal Reserve has been (overly, imo) concerned abut inflation and has been raising short-term interest rates (17 times) in order to slow demand for commodities. Because our economy is rather sensitive to interest rates (because so many folks carry variable rate debt), investors are worried that the Federal Reserve has gone too far and has placed the economy at risk of recession. In a recession, stock earnings suffer and investors become more interested in guaranteed investments and less interested in stocks who's earnings are more questionable.

So, stocks have fallen because bonds are relatively more attractive and there is some doubt about the future of the economy and earnings.

If the Federal Reserve stops raising rates (or hints that they will) and earnings continue to look good, the market will likely reverse and move higher.

Mark S. Young

Answer 4

inflation fears and fears of more interest rate hikes