What it is:
Market jitters refers to apprehension among buyers and sellers resulting in choppy and unpredictable market performance.
How it works (Example):
Unfavorable news regarding economic indicators, earnings reports, interest rates, etc. can lead to an environment of uncertainty in the stock market. As a result, people may become worried and sell some of their holdings in an effort to avoid future losses.
Collectively, these market jitters result in market indices declining. For example, poorer-than-expected quarterly earnings and increases in the unemployment rate could easily cause market jitters and a subsequent dip in the Dow Jones Industrial Average (DJIA) and/or other market indexes.
Why it Matters:
Market jitters normally result in short-term stock price declines. If a stock index loses value on a given day because of market jitters, it often recovers in the days that follow. As a result, investors should note when particular stocks experience declines due to market jitters, because favorable returns could be made once the stock recovers.