Plunge! Rebound! Crash! Rally! Plunge again! Why is the U.S. stock market so volatile?
Plunge! Rebound! Crash! Rally! Plunge again! Here are seven reasons why the U.S. stock market is so volatile.
1. Fear Factor -- Fear typically drives much of the selling on the stock market, mainly fear of more substantial losses to come.
2. Economic Worries -- The markets are often slaves to economic data, which has been on the upswing in recent months, but one bad report can send stocks plummeting.
3. Europe Uncertainty -- A looming euro zone debt crisis weighed on markets for years, and the worst may not yet be over.
4. Lack Of Political Leadership -- Stocks have largely shrugged off the political gridlock that lead to the forced budget cuts of the sequestration, but the inability of political leaders to come together has weighed on the markets before and likely will again.
5. China's Economy -- U.S. stocks rise and fall with the ups and downs in China's economy at the moment.
6. Computer Trades Are Destabilizing -- With nearly 70 percent of stock trades now executed by so-called high-frequency traders that use super-smart and super-fast computers, the market's sharp moves are amplified.
7. Forced Selling -- Many hedge funds and other big investors that used borrowed money to boost returns are now being forced to sell assets to raise money to meet margin calls.
Click here to learn about 13 surprising stock market indicators.
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