Ask an expert: Why such a rough June for markets?

MSN Money's Charley Blaine explains what's behind the big drop-off in performance and where investors should look next.

By MSN Money Partner Jul 10, 2013 9:41AM
U.S. markets had an excellent first few months of the year. January through May, the S&P 500 ($INX) gained more than 14%. But then came June, and the markets ran into some tough going. The S&P 500 was down nearly 1% as was the Dow Jones Industrial Average ($INDU).

In this video, MSN Money's Charley Blaine explains what's behind the market's June performance, when the turbulence might end and which sectors show promise in the months ahead.
Arrow Down (© Photodisc/SuperStock)The Federal Reserve has been buying $85 billion worth of mortgage-backed securities and Treasurys each month, pouring liquidity into the markets and keeping interest rates low. But in June, as the Fed began discussing the dreaded tapering of its quantitative easing measures, mainly its bond buying, investors began selling Treasurys. This means, Blaine explains, that Treasury yields went up, and at the same time, stocks went down.

Fed officials immediately reacted by stating that any tapering won't be immediate and will happen only if they believe the economic recovery wouldn't be jeopardized. Already, we've seen that both the stock and bond markets are reacting positively to these calming words.

What should investors do? In the video, Blaine suggests several areas in which to invest on a dip, as well as one well-known stock.

The discussion about markets and investing continues over in MSN Money's Facebook community.

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4Comments
Jul 10, 2013 10:03AM
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No need to read the Article....Very simple: Rough June, because of a Mild May...

Pretty much pent-up desires, demands, agendas, etc, etc.

Jul 10, 2013 10:54AM
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Anybody thinking this market, US Economy, World economy, is running well and secure really needs to think twice really slowly.  Just look at the issues we are facing.  There is a total and complete breakdown ensuing in the World reliance on the American consumer.  We have spoon fed just about every individual economy in the world through our favored trade agreements and the American consumer is running on empty.  The FED has jammed so much dopey money into the system we are travelling on an untrodden path.  Do you really believe these cats know what they are doing?  Perhaps they are merely throwing massive amounts of fake money thinking money is the answer.   More credit and money is not what we need in my opinion.  We pretty much know these folks are attempting to worldize the International Corporations. This is new territory and of course there are issues.  The fact we aren't being informed of the plan and where we are presently should send an even more troubling message.  If you believe these folks will protect our lifelong interests then good for you.  I don't. The present trade policies have arrested any wage increases for some time and anyone thinking this adds to the bottom line at this point is ill informed.  We now either need to rebuild consumers or face wage defaltion which I think is the ultimate goal.  We are engaged in a takeover of unbeleivable magnitude.  We are seeing about 2 trillion in debting to marginilize the effects.  This will not go on forever and when they stop you had better be very fearfull of how this effects the money we have trusted to the street and ultimately the FED.   Better be very very sure at this point because something is most definitely being cooked that we are unaware of. JMHO
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