Wall Street stumbles 3.3% as fears of a recession grow

U.S. economy and market concerns

Wall Street has entered bear market territory. However, don't panic, financial experts say. Instead, focus on what you can control.

NEW YORK - Wall Street stocks slumped again on Thursday, erasing another 3.3% from the S&P 500. The index has fallen 23.6% from the peak it reached in January. The Dow plunged 2.4% and the Nasdaq dropped 4.1%.

The renewed selling came a day after a brief reprieve for markets when the Federal Reserve delivered a huge interest rate increase in its effort to fight back inflation, which is at a 40-year high, and prevent prices from continuing to spiral out of control. For example, the national average price of gasoline has topped 4% a gallon.

Markets are worried that the Fed and other central banks may stumble along the narrow path of hiking interest rates enough to slow high inflation but not so much that they cause a recession.

So what can Americans do to protect themselves if a recession hits?

Financial planner Roger Ma, the founder of lifelaidout and the author of Work Your Money, Not Your Life, says you shouldn't focus on those external market movements, which you cannot control. Instead, focus on your personal situation and your financial goals, which you can control, he says.

The rule of thumb is to put three to six months of living expenses in an emergency fund, Ma says — more if you can. This is a good time to audit your expenses from the last three to six months to see where your money going, he says. Put your expenses in buckets: the need-to-have and the nice-to-have, he says, and see if you can decrease or eliminate the nice-to-haves.

With The Associated Press and FOX 5 NY's Jessica Formoso.