What is a volatile market?

A volatile market is often characterized by extreme price fluctuations and widespread uncertainty. Nobody knows what to expect, and fear—or euphoria—can grip investors.

During these moments, it can be tough to sit still. Your investment portfolio may seemingly plummet—or soar—based on the smallest whisper: a rumor that the Fed might change interest rates, that the government may approve an industry bailout, or that the president might issue an executive order. It’s hard to guess what impact each development could have on the stock market.