‘Don’t panic,’ BOK Financial chief investment strategist says about markets’ downturn

“First and foremost, don’t panic,” Steve Wyett, chief investment strategist at BOK Financial, said in an email to the Tulsa World on Monday.

“There are always questions and risks when it comes to the economy and market. But it is also true that there are periods where it seems uncertainty is especially high, like now,” he said.

“It’s also important to keep in mind that, year-to-date, the stock markets are still up. The last couple of days have felt bad and been scary, but overall, many investment account values are still higher.”

BOK Financial is a multibillion-dollar financial services holding company — amid the top 50 in the U.S. and the largest in Oklahoma.

On Monday, the S&P 500 dropped 3% for its worst day in nearly two years. The Dow Jones Industrial Average reeled by 1,033 points, or 2.6%, while the Nasdaq composite slid 3.4% as Apple, Nvidia and other Big Tech companies that used to be the stars of the stock market continued to wilt.

The drops were the latest in a global sell-off that began last week. Japan’s Nikkei 225 helped begin Monday by plunging 12.4% for its worst day since the Black Monday crash of 1987.

It was the first chance for traders in Tokyo to react to Friday’s report showing U.S. employers slowed their hiring last month by much more than economists expected. That was the latest piece of data on the U.S. economy to come in weaker than expected, and it’s all raised fear that the Federal Reserve has pressed the brakes on the U.S. economy by too much for too long through high interest rates in hopes of stifling inflation.

“We typically see at least one 10% correction a year,” Wyett said. “Despite the moves lower over the last few trading sessions, the major-large indexes are still positive for the year,” he said.

Wyett said much of the turmoil seems to be coming from an unwind of trades levered to low-cost borrowing in Japan.

“As rates have moved higher there,” he said, “borrowing costs are going up and triggering selling of assets funded by said borrowings which is leading to more selling.

“Overall earnings estimates for the S&P 500 are steady to higher with overall Q2 2024 earnings overall coming in above expectations, and bond values have risen as interest rates have fallen — meaning diversified investors have seen a limit to overall portfolio declines,” Wyett said.

Economic data on the services side of the economy surprised to the upside, he said.

“While unemployment levels are rising, we still have very low levels of unemployment at 4.3% and more open jobs than unemployed persons. Credit spreads have widened a bit but not to troubling levels. Equity valuation levels were at elevated levels, not egregiously expensive but not cheap either — this made stocks a bit more susceptible to a sell-off.”

The bottom line, he said, is this: “Stay the course and stick to your plan. If you don’t have a plan, get one.”

— The Associated Press contributed to this story.