STEVE INSKEEP, HOST:
There was a time about a decade ago when it seemed you had to follow the stock market every minute. How much would it dive down or bounce up? In more recent years, the stock market grew pleasantly boring, almost always drifting up. Now we once again seem to be living in interesting times.
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UNIDENTIFIED MAN #1: The Dow suffering a big sell-off today. Let's look at the final numbers.
UNIDENTIFIED MAN #2: Another wild day of trading has just ended on Wall Street.
UNIDENTIFIED MAN #3: And all of a sudden, just like falling off the top of the cliff a little bit.
UNIDENTIFIED MAN #4: Ugly viewing if you're long in stocks, for anybody interested in financial markets.
UNIDENTIFIED MAN #5: And the market just broke again. We haven't seen it break in a long time.
INSKEEP: Those voices. Four-point-six percent down on the Dow Jones Industrials. Stocks lost 4.6 percent of their value in one day, which we will talk through with NPR's Scott Horsley, White House correspondent and Ari Berliner, our business editor. Hi there, guys.
SCOTT HORSLEY, BYLINE: Good to be with you.
URI BERLINER, BYLINE: Hey, Steve.
INSKEEP: Scott, you covered economics before politics, so I want people to know that. So you've followed the economy a very long time. How does this feel when you back away from the immediate chaos?
HORSLEY: We know at the beginning of last week, Steve, there was a story in The Wall Street Journal that said the market was off to its best start in 2018 since 1987. And I read that, and I thought, uh-oh, because I was just starting out as a young reporter in 1987, and I remember the stock market crash that came that fall when a lot of people on Wall Street lost their jobs. You know, if you look back over the longer-term perspective, which is how most long-term investors ought to be thinking, the '87 stock market crash was just a blip. It was followed by a long expansion of the U.S. economy. But it doesn't make it any easier when you're living through the gyrations moment by moment.
INSKEEP: That's a good point. A stock market dive does not always mean the economy is crashing but something has happened. And, Uri, what has changed here?
BERLINER: Well, it's, you know, clearly a change in sentiment. More people want to sell than buy. You know, as Scott mentioned and you did too, we've had this long upward increase in stock prices. It's been going on since 2009. And by some measures, the market's overvalued. So it's kind of natural that there would be some selling. What was strange was just the panicked sentiment in the market yesterday, the rapid sell-off, the feeling that, like, something has gone wrong.
INSKEEP: When you say the market is overvalued, that's something that people can calculate - right? - having to do with the earnings from the - price to earnings ratio. How much is the stock bringing back?
BERLINER: Exactly, they're measurements.
INSKEEP: And it could be that other investments are looking different or more attractive as interest rates change. Is that possibly one of the things happening here?
BERLINER: Well, it could be. But right now, what's happening is that, you know, there's a lot of selling. People are getting out of stocks because that's where so much money has been. And, you know, right now, it could be that people are putting their money in cash because other things are not looking that attractive either, bonds aren't and clearly bitcoin isn't. So it's not really apparent...
INSKEEP: Although bitcoin looked great a few weeks ago, I guess.
BERLINER: It sure did.
INSKEEP: Just an amazing situation. And you keep saying could be, which is smart because we're talking about the independent decisions of thousands of investors here. Scott Horsley, how's the president handling all this?
HORSLEY: The president was in Ohio yesterday visiting a factory, and it's the kind of setting where, just a week or two ago, he would have been joking with workers about their 401(k)s and saying you all look like investment geniuses. Yesterday, he said not a word about the stock market - the old live by the Dow, die by the Dow. His spokeswoman did later put out a statement saying that the administration is focused on the long-term fundamentals of jobs and wages, and those are still performing very well.
INSKEEP: Uri, he mentioned 401(k)s. How many of us - how many Americans are affected directly when the Dow drops 1,175 points?
BERLINER: Well, it's hard to say directly. Only about half of Americans really have stocks in their portfolio or their 401(k) or their retirement account. And even those people, most of the stocks are held by pretty affluent people. So a decline like this would affect people who have a lot of money in the stock market. But even for those people, if you're a long-term investor, you're going to ride this out. I think the only people who would clearly be hurt right now are people who needed this money right away, maybe because they're retiring or paying for their kids' college.
INSKEEP: Uri, thanks very much, really - oh, Scott, go ahead.
HORSLEY: You know, we've seen a long period of time where the stock market's been doing wonderfully and wages have been relatively stagnant. Now it seems we have a little bit the reverse. We got a good report on wages last week, which is perhaps part of what spooked the market. Politically, from the president's point of view, that may not all be a bad thing.
INSKEEP: OK. So we'll say goodbye to Uri Berliner. Thanks for coming by, really appreciate it. Scott, stay with us for just a moment because we have another big story to talk about and it involves a memo. Last week, Republicans released a memo criticizing the FBI. Now the House intelligence committee says it's willing to release a Democratic version. What's going on there, Scott?
HORSLEY: This is a Democratic version that is supposed to fill in some of the gaps left by the Republican version that came out last week. It goes now to the president, and he's got five days to decide whether to make it public.
INSKEEP: Oh, he decided to release the Republican memo?
HORSLEY: He did. And the White House says they'll give similar consideration to the Democratic version.
INSKEEP: NPR's Scott Horsley. Thanks very much.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.