Why markets get moody

Yesterday, Moody’s Investor Services helped trigger a bout of pessimism when it downgraded some banks. Not much actually has changed. 

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Moody Markets
Welcome to the Know the Difference Minute for Wednesday, August 9th.
One day the stock market is rallying and the next it’s falling. And then it switches again. What gives? Does the economic outlook change that much that quickly to justify those types of swings?
Sometimes it does, but most of the time it doesn’t. Investor sentiment is the biggest driver of daily moves in the markets and sentiment can be very fickle. The famous value investor, Benjamin Graham, wrote in 1949 about Mr. Market, a fictional character that investors go into business with. One day Mr. Market is in a great mood and wants to buy your shares at a high price. The next day he’s in a foul mood and wants to sell you shares at a steep discount.
Yesterday, Moody’s Investor Services helped trigger a bout of pessimism when it downgraded some banks. Not much actually has changed. Markets just got moody.
I’m Brian Jacobsen, Chief Economist at Annex Wealth Management. That is your Know the Difference Minute.