What’s the best thing to do during a weakening stock market?

Stock market falters are never enjoyable, yet it is the nature of the market to hit lows. Such has been the case for the market this year. The volatility experienced throughout 2022 is based on heightened inflation coupled with tough government reactions.

As markets in Europe, China, the United States, and other places around the globe slow down, is there hope for stock investors? What is the meaning of the Fed’s interventions, like the one witnessed recently concerning interest rates?

There are steps that a stock market player can take to remain relevant amid the confusion. And since the relationship between interest rates and stock markets cannot be ignored. Below is a look at the situation and the available options.

What’s going on?

About a week ago, the Federal Open Market Committee (FOMC) added 75 basis points (bps) to the federal funds target rate. This is part of the committee’s stringent monetary policy to arrest runaway inflation. This action has set the stock market into action.

The Standard and Poor’s 500 (S&P 500) is at the lowest point in a couple of years, with experts pointing out concerns about the Fed’s recent tightening efforts. Most investors are pondering the next move because it appears that stability in the market is still not in sight. Since the Fed outlined the added measures to control inflation, the pressure on the stock market has been growing. The 3,647.29 point of the S&P 500 erodes the gains that the index had seemed to garner during the mid-August rally.

The volatility being experienced in the stock market is also caused by a further announcement by the Fed that it wouldn’t hesitate to take even more tough measures.

Some Steps to Take

Stock market traders can therefore wonder what the best next steps are to survive in a weakening market. Many are tempted to sell their investments now so that they can buy them when a rebound is imminent. However, it is difficult to time the rebuying, even for expert traders.

Having said that, most investors who choose to remain steadfast as the market weakens get positive returns after some time. It could be after a year, but it will be worth the wait. In other words, it is better to have a longer-term view of the stock market situation instead of rushing to beat the current one.

Considering the heightened volatility of the stock market, it may be worthwhile to consider the following steps;

  1. Identify new opportunities

Even in a bear market, there are potential opportunities, especially in utilities, healthcare, and other defensive stocks. One may also find investment opportunities in stocks that have consistently expanded their dividends.  Being strategic is crucial during a weakening stock market. That’s why it is also advisable to open a fiduciary account, which offers professional management. During a weakening market, professionally handled funds tend to perform better than passively managed ones.

  1. Keep Your Focus

History shows that regardless of the intensity and duration of a stock market downturn, there has always been a recovery. This alone should give the investor energy to keep at it. Financial advisors will always remind us to keep emotions out of investment decisions, and there is no better time to use that suggestion than during a weakening market. Probably this is the time to ask for professional insights on what suits your investment goals, instead of risking the pitfalls that have spoilt other investors’ efforts in the past.


A market decline can bring confusion to the trader, but it is best not to panic. For anyone looking at the long-term outlook of the market, a weakening stock market is not necessarily an issue. Investment opportunities are always available, for instance, in defensive stocks. Therefore, appreciate that the economy is declining, but keep your eyes on the ball. Not even news that the world is in the blink of a recession should prompt you to exit the market. Things will improve in the end and the stock market will rise once again.

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