The Nasdaq Composite, Dow Jones Industrial Average and S&P 500 all declined for three straight weeks, with the Nasdaq bottoming almost 17% below its November peak.

Markets had dipped into correction territory — a decline of 10% or more — as investors came to grips with an expected pullback in economic support from the Fed, said Jeffrey Haymond, dean of Cedarville University’s School of Business Administration.

The big issue, as Haymond views it: The Federal Reserve has held interest rates at zero or close to it since the Great Recession. The Fed has also more than doubled its balance sheets, sinking $5 trillion into the economy in just the past two years, raising its securities portfolio to $9 trillion.

“The markets are starting to come to grips with, ‘Hey, there’s going to be a different monetary regime,’ ” Haymond said. “We’ve had easy money for over a decade. And now we have tightening markets.”

By Tuesday’s close, all three of those market indexes had regained some losses, with the Nasdaq nearly out of correction territory, and the S&P only 5% off its early-January peak.

Haymond said uncertainty over whether Russia will invade further into Ukraine had also affected markets.

Inflation isn’t going to dissipate quickly, he predicted. And unless the market crashes between now and March, the Fed will raise rates, he believes. Over the next three to nine months, he expects markets to go lower.

“I don’t think they’ll really get a handle on inflation,” Haymond said of the Fed.

Mark Hackett, Nationwide’s chief of investment research, adds to the list of traders’ concerns: A disappointing corporate earnings season. Some corporations have reported lower earnings in recent days, often on supply chain woes.

Still, Hackett doesn’t see a market panic yet. What’s happening is not altogether unhealthy, he said, calling recent activity “a pressure release valve.”

“We were just looking for a reason to sell off, and we’re getting that reason,” Hackett said. “That to me is good news, that probably means this isn’t pervasive.”

“It’s a sell-off in search of a reason,” he added. “And I think that’s probably the most important thing.”

Hackett advises market-watchers to keep an eye on first quarter 2022 corporate earnings estimates, which are starting to tick down, a hint that this may be more than a mere moment of volatility.

PNC Bank Economist Abbey Omodunbi sees the same issues, but he also sees reason for long-term optimism.

“The economic fundamentals are solid, though. Regardless of the cross-currents we’ve been seeing, consumer fundamentals are rock solid,” he said.

On Wednesday, Omodunbi expected the gross domestic product to show strong growth on an annualized basis. In fact, the fourth quarter GDP was put at 6.9% on an annualized basis, Thursday’s report showed.

He doesn’t expect the COVID-19 Omicron variant to have a lasting effect on the economy. And a gradually smoothing supply chain this year should help to grow the economy and ease inflation.

“I’m still very optimistic about economic growth,” he said.

4 things to avoid doing during a down market

Being successful in investing is often about what you don’t do as much as what you do.

1. Don’t check your portfolio every day: That can be a recipe for making emotional, short-term decisions — and those rarely work out well. If you must check your portfolio, do so at a regular period – say, weekly – though even longer may be better.

2. Don’t get caught up in the moment: Some try to avoid losing money by selling right now at any price in order to stop the pain. Those who sold during the downturn of March 2020 – statistically some of the worst days ever for the S&P 500, as COVID began to wind its way around the world – went on to watch the market rise steadily for nearly two years afterward.

3. Don’t forget your own personal financial situation: If you have a pressing need for your money as a retiree or soon-to-be one, you’ll want to carefully consider your investments as part of your financial plan. While investors with long investment horizons should probably do little or could even add more to their portfolios during a correction, other investors will want to assess their immediate financial needs.

4. Don’t say “you’ll wait until the market is safer:” Many investors tell themselves this little fib as a way to soothe their conscience when the market scares them into selling. They justify their actions by saying that they’ll buy at a lower price later. And sure, sometimes they can. But as often as not, the market rebounds before they’re able to buy back in.

--- James Royal, Bankrate.com