Even with steep declines in the last two days, shares of most Louisville-based companies are still up for the year. | Illustration by Boris Ladwig

After a broad, two-day sell-off on Wall Street and markets across the globe, two financial analysts encouraged investors to not panic, as economic fundamentals, especially in the United States, remain strong.

The Dow Jones industrial average lost nearly 1,400 points, or about 5.2 percent, in the last two days, as investors worried about rising interest rates, trade disputes and the coming earnings season.

“It has been pretty ugly,” PNC Investments CEO and President Rich Guerrini told Insider Louisville, “(but) the worst thing you can do in these situations is panic.”

Mark Nickel, chief investment officer at Hilliard Lyons, agreed.

“We need to remind people that volatility happens,” he told Insider Louisville Friday morning.

For most people, whether they’re in their 30s and putting a portion of each paycheck into their 401(k), in their 50s and getting close to retirement, or in their 70s and already retired, a big market drop, while scary, should not deter them from their long-term investment strategies, the advisers said.

Rich Guerrini

Guerrini said that the market declines in the last two days were remarkably similar to the sell-off in February, when the Dow plunged more than 1,800 points in two days. Choppy trading continued until around June, but markets had remained pretty stable since then and flirted with record highs.

But, Guerrini said, markets don’t go up in a straight line, and U.S. markets have not seen as many corrections — declines of 10 percent or more — as one would expect.

He said investors in the last few days engaged in a lot of “panic selling” as opposed to reacting to any economic news. The sell-off in the last two days was a stock market event — not an economic event, he said.

“When you look at the economy, it continues to be strong,” Guerrini said.

A lot of people are working, the unemployment rate is low, borrowing rates are rising but still low historically, and data this week indicated that inflation remains in check.

Mark Nickel | Courtesy of Hilliard Lyons

Nickel agreed, and said that investors in the last two days may have been reacting to rising bond yields, some companies warning about lower earnings expectations and the International Monetary Fund warning that global growth is moderating.

Markets rarely react to just one catalyst, Nickel said.

Most U.S. economic indicators remain positive, and consumers, who account for 70 percent of U.S. economic activity, are doing well. Usually, Nickel said, several indicators begin to weaken six, 12 or 18 months before a recession. And there are no signs as of yet.

Nickel said he expects growth to continue through next year, although at a slower pace, primarily because of the declining stimulative impact from the federal tax cut.

For people who are 30 years away from retirement and who are steadily putting money into their retirement account, a market decline is an opportunity to buy stocks at a lower price than they cost at the beginning of the week, he said.

And, Guerrini said, people who are close to or already in retirement cannot afford to completely abandon stocks, because they need their retirement nest egg to last. Retirees need an annual return of more than 2 percent just to keep up with inflation.

Before U.S. markets opened Friday, Guerrini predicted a bounce, and indeed, the Dow Jones was up more than 1 percent in early morning trading, with the broader S&P 500 and the tech-heavy Nasdaq posting even stronger gains. Shares of most Louisville-based companies rose as well. Humana was up 1.4 percent, Brown-Forman rose 2.4 percent, and Papa John’s and Yum Brands saw gains of about 0.8 percent. Gains diminished however, with the Dow seeing nearly half its morning gains erased shortly before noon.

Even including the declines from the last two days, shares of most Louisville-based companies were still up for the year. And some of those that have suffered declines, such as Papa John’s, are dealing with struggles specific to their companies, rather than overall economic woes.

Keep an eye on the last 30 minutes of trading, Guerrini said. In the last two days, markets dropped quite a bit in the half-hour before markets closed. A sell-off in the last stages of trading of this week could signal more choppiness for next week.

Nickel said that while market declines may be unsettling, especially for people close to or in retirement, he encouraged people to stick it out.

People should review, every once in a while, whether their portfolio carries the right amount of risk for them and still aligns with whatever they’re trying to achieve, he said, but reacting to — or even paying attention to — daily market swings is unwise.

“Keep your eye on your goals,” he said, “and don’t fall prey to the noise.”