Dow Jones Has Its Worst Week In 10 Years
The Dow Jones experiences its worst week in over 10 years.
The Nasdaq index is now in a bear market and the Dow Jones Industrial Average is experiencing its worst weekly decline since 2008. The poor performance from the Nasdaq and Dow Jones Industrial Average highlights issues facing many sectors of the economy.
Firstly, the Federal Reserve is said to be hiking rates even further over the next 12-months, which has caused Wall Street selloffs to ensue. The thought of the Fed increasing rates leads economists to believe that economic slowdown is immanent. These selloffs have caused the Dow Jones to close 414 points, down 1.8% on Friday. The Nasdaq has fell by 3%, which is the first time that the index has been in a bear market since the Great Recession. The S&P 500 dropped 2.1%.
Despite the FED hiking rates being a catalyst for stock market selloffs, there are more factors at play. The U.S and China trade war is causing the global economy to suffer marginally, with tighter trade regulation also a factor. The most significant losses we have seen come from Apple (NASDAQ: AAPL), Netflix (NASDAQ: NFLX), and Twitter (NYSE: TWTR).
How Much Has The Dow Jones Declined?
Looking at the week’s outlook, the Dow Jones dropped 1,655 points which represents a significant percentage decline of 6.9%. That is the most significant weekly loss that the Dow has encountered in over 10 years. The Nasdaq lost 8.4% in the same time and the S&P 500 dropped by 7.1% in the week also. These three indexes are a strong representation of all the major U.S equities, with all three indexes down by over 12% in December. What’s more worrying is that stocks are on track to have the worst December since 1929.
The Dow Jones was not the only major index facing downturns. The Russell 2000 and oil were also down. Global marks didn’t fare much better, with stock markets in Italy, China, Germany, South Korea and Japan also in bear markets.
Global economic downturn is at the forefront of investors minds right now. On a global front, issues like Brexit, FED rate hikes, and a potential US government shutdown are all major catalysts for the market declines that we are seeing.
Can we expect the Dow Jones to make gains?
With the S&P 500 trading at only 14.5 times 2019 forecasted earnings there may be signs of hope. Typically we see the S&P 500 trading at 16 times its earnings, which signifies that the worst of the selloffs may be over. If the S&P 500 has experienced the worst of the selloffs, then maybe the Dow Jones is over the worst also. Many U.S equities are at their lowest levels in months, giving investors an entry point if they are willing to risk the chance of further declines.
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