A global financial market is set to be shaken by a sharp correction, and investors will need time to adjust to the sudden change.
The S&P 500 fell more than 7 per cent on Monday, following a sharp fall of 7.7 per cent earlier in the day.
It is down more than $5,000 from its high of $9,895 on November 11.
The sell-off is the latest in a series of bearish trends that have hit the markets since the financial crisis.
The Sesquicentennial and Easter holidays are the first to be disrupted by the sell-offs, which are expected to continue.
Investors are also bracing for the potential impact of a Chinese stock market rout and a rise in the price of gold and other commodities, as well as other financial volatility.
A fall in oil prices will make global crude prices more expensive and a global trade war may cause an increase in interest rates in the US, which will further strain the economy.
A sharp fall in the S&s stocks futures price, which is used by investors to calculate the cost of a stock, was expected to push up the price.
The drop in the futures price was around 4.5 per cent from its opening level of $10.43 a barrel, according to data from the CME Group.
Investors have been waiting for an improvement in the global economy.
“The markets have always been a very bearish asset class and now, the reality is that they are looking at a very uncertain world.
We’ve got to wait and see what the market does,” said Steve Lohmann, chief investment officer at investment firm J.P. Morgan Chase & Co. (JPM) in a call with analysts.
In a statement, J.H. Lawrence said that the Sesqicentennial is “highly unlikely to affect market sentiment”.
“If the holiday market is a holiday in itself, then we expect the holiday to be the highest of the year,” Mr Lohman said.
However, the holiday season will likely be longer than usual as the stock market tends to have a stronger year-to-date bounce.
At the same time, it will also be a more expensive time to trade stocks, with the SESQ index falling more than 1 per cent.
Analysts believe the sell off will make it more expensive to buy stocks.
With the S.&.;P 500 down 5 per cent and the Dow Jones industrial average down 6.2 per cent, there are concerns that stocks will take a hit on Monday.
According to research firm FactSet, the Dow and S&am are both expected to fall over 20 per cent in the next 12 months.
Traders and analysts are also concerned about the effect of China’s government tightening its monetary policy.
The Chinese central bank cut interest rates by a quarter of a percentage point last month, following years of easing.
China has already lost its status as a major financial centre.
China’s stock market has also been on a tear, with some analysts predicting the market will finish the year up about 1 per 10,000.
However, many investors are worried about China’s ability to handle an economic downturn.
If China does get hit, it could force other major markets such as Europe and Japan to follow suit.
Meanwhile, the price for gold has also fallen, with gold prices declining more than 5 per $100 bills since the beginning of November.
For investors, the most important thing to know about the selloff is that the drop in oil and commodity prices will hurt their returns, but that won’t affect the broader market as the broader markets will have a bounce back in the months ahead.
Shares in some of the world’s biggest companies are also set to fall, including oil producers Chevron and BP.
Gold has gained more than 15 per cent this year and will continue to do so as the market prepares for another rally in oil, commodities and the Sustainability Index.
More to come.