Panic flooded the stock market on Monday in response to a weak jobs report and heightened fears of a US recession. With news of the unemployment rate increasing from 4.1% in June to 4.3% in July -- the highest since October 2021 -- global markets faced a major sell-off. 

Just last week, the Federal Reserve voted to hold interest rates steady, with Fed chair Jerome Powell citing a strong job market. Now that data shows the economy slowing more than expected, many are putting pressure on the Fed to make a deep rate cut in September or even an emergency interest rate cut before the next meeting.

Aaron Sherman, certified financial planner and president of Odyssey Group Wealth Advisors, says the latest jobs report indicates that interest rates should come down. However, he also warns against drawing too many conclusions too soon. Market activity, which is driven by investor expectations, is often volatile.  

“We’re seeing the market’s emotional side right now,” Sherman said. “Market psychology [is] shifting abruptly from ‘it’s all good’ to ‘the sky is falling’ without much justification. Yes, there are signs the economy is slowing, but it’s not falling off a cliff.”

Here’s what experts have to say about the market panic and what you can do now.

Worried about a recession? Here’s what experts suggest 

Last week’s job report showed an uptick in the unemployment rate and a surge in temporary layoffs, sparking fears of a recession. “The report was weak across the board, unlike in prior months,” said Robert Fry, chief economist of Robert Fry Economics. 

The economy has been slowing, but Sherman doesn’t believe we’ve seen enough consistent signs that we’re entering a recession.

Whether we’re officially in a recession or not, US households have been severely impacted by inflation, the high cost of borrowing and a volatile economy. 

With job losses increasing, it’s important to plan ahead and focus on what you can control. Even if the Fed cuts rates next month, the economy works in ebbs and flows, and conditions never change overnight. Monitoring the market and taking steps to protect your finances is what’s in your immediate control.

Build an emergency fund

Bola Sokunbi, founder of Clever Girl Finance, recommends building up an emergency fund. An emergency fund gives you a cushion to dip into if you unexpectedly lose your job or a surprise bill pops up.

If you’re already struggling to make ends meet, building an emergency fund can be slow and difficult. Start by reviewing your budget to see if there are any expenses you can cut out or reduce -- even if it’s just temporary. Then focus on moving the money you’re freeing up into a high-yield savings account.

“Setting up automatic transfers to your savings account can help you save consistently. Even small, regular deposits add up over time,” Sokunbi said. For example, if you can free up $50 a month by canceling a streaming subscription and then move an extra $100 per biweekly paycheck into a savings account each month, you could have more than $3,000 saved in a year. 

Compound interest from high-yield savings accounts or CDs can help your savings grow even more. A longer-term CD could help you lock in a solid annual percentage yield, which will give you greater returns and make it less tempting to spend. 

If you’re worried about losing your job, Shang Saavedra, founder of Save My Cents, suggests keeping your resume up to date and your network fresh. Add your latest job, skills and responsibilities and include any references, awards and certifications. That way, your resume is ready in case you need to start looking for employment. 

“I network by regularly catching up with peers and friends in my industry,” Saavedra said. You can also seek to expand your network and establish new connections to stand out when the time comes. 

Pay down high-interest debt

If you’ve had difficulty paying down high-interest debt, like credit card debt, Jason Steele, an expert review board member and personal finance expert, recommends reaching out to your credit card issuer to discuss your options. They may be able to put you on a repayment plan, lower your interest rate temporarily or place you in credit card forbearance. You could also explore 0% balance transfer offers or a debt consolidation loan to give you a respite from interest charges.

Gerri Detweiler, an author and credit card expert, said you shouldn’t wait on interest rate cuts for relief if you’re struggling to make your credit card payments. Detweiler also recommends talking to a professional, such as a credentialed debt relief expert. 

We recommend the National Foundation for Credit Counseling and the Financial Counseling Association of America. The Justice Department website also has a list of approved credit counseling services in every state.

Take a long-term approach to investing 

When stock prices are lower, it may seem like the ideal time to change your portfolio. But it can be a slippery slope for investments you’ve already made, and experts say it’s best to focus on long-term diversifying rather than knee-jerk reactions. 

“When stock prices go down, you’re poorer, which is bad,” Fry said. However, he pointed out that if the positive and negative impacts balance out, your asset allocation is OK. Take the time to review your tolerance for risk and examine your investment goals.