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.
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.
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.
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