Reporters Add Perspective to Stock Market Fluctuations

Just as quickly as the champagne corks popped to celebrate the Dow Jones Industrial Average close above the 14,000 mark, the buzz quickly fizzled out with one-day plunges and considerable economic concerns.

The mortgage market crisis and resulting credit crunch is raising caution flags as banks become more selective in issuing consumer credit loans.

Reporters are factoring these trends into their stories when reporting on the 1,000-point decline in the Dow over the last month.

"Stocks have crumbled in recent weeks amid mounting worries about the health of the U.S. financial system, which has been rocked by rising mortgage defaults and sinking home prices," write Tom Petruno and Josh Friedman for the Los Angeles Times. "The Dow is down 8.2% from its record close of 14,000.41 on July 19 and has swung wildly in the last four weeks, closing up or down in triple digits on 12 of 19 trading days."

The Federal Reserve and Chairman Ben Bernanke are certainly keeping a close eye on the direction of the economy and taking steps to curtail a possible recession.

Last week, the Fed cut its discount rate from 6.25 percent to 5.75 percent in an effort to make it easier for banks to borrow money.

"The Fed has taken a number of steps to prop up the nation's financial institutions ahead of its scheduled Sept. 18 meeting, including injecting more liquidity into the banking industry and cutting the discount rate," according to Rick Babson of The Kansas City Star. "But many on Wall Street want the Fed to do more, including lowering the more important federal funds rate, and to do it soon."

Though the Fed headlines and overall economic trends are important to note, many readers simply want to know how major market fluctuations trickle down to their wallets and various investment vehicles. Journalists are responding to this need in their online and print publications.

Russ Wiles of The Arizona Republic responded to reader questions about the wild stock market ride.

"There's no standard answer for everyone," he said to one reader inquiry. "If you have lost sleep over the past couple of weeks, you probably should pare back your stock-market holdings. An adjustment also may be warranted if you're nearing retirement age or otherwise expect to need to spend your money fairly soon - within the next couple of years. Still, it's rarely wise to head for the exits without planning your moves, especially if doing so would trigger a tax bite."

Copyright © 2008 Donald W. Reynolds National Center for Business Journalism