Markets take plunge over recession fears

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BURLINGTON, Vt. (WCAX) A Burlington investment adviser urges people not to worry or panic amid a three-digit Dow Jones drop.

The Dow closed down 800 points on Wednesday, prompting fears on Wall Street and across the U.S. that a recession is in the near future.

According to George Ewins, an investments senior vice president at Raymond James, it might be judging by the current trend of the inverted yield curve.

“It's been historically an indicator that some 20 months down the road, a recession is going to come,” Ewins said.

The inverted yield curve happens when the longer-term bonds offer higher returns to investors than shorter-term bonds. The yield curve inverts when yields on that shorter-term debt exceed those on longer-maturity debt. Experts say the longer the inverted yield curve continues, the more imminent the threat of recession becomes.

Ewins says you shouldn't panic. Instead, he suggests you talk to your financial advisers and revisit your plan.

WCAX News asked a few people what their initial reactions were to the Dow plunging. Some of them said they immediately start worrying about their 401k.

"I don't think you ever want to panic, I think you want to be strategic,” said Michael Herring. “I think when you see some of the ups and downs that are short-term, looking over a long period of time, it still is going up."

Laurie Lawrence-Pepin said she’s been on this rollercoaster before but has faith that everything will settle down.

"I believe very much in this country and things will write itself," Lawrence-Pepin said. "I don't know when but it will."

This affects the U.S. but also markets worldwide. Experts say this will put pressure on the Federal Reserve and its chairman, Jerome Powell, to cut interest rates. Powell has been the subject of President Trump’s withering criticism over the Fed’s monetary policy.