What are Market Jitters?
Market jitters refers to apprehension among buyers and sellers resulting in choppy and unpredictable market performance.
How Do Market Jitters Work?
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 Do Market Jitters Matter?
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.