You may have read the dire warning yesterday that the Dow Jones dropped some 665 points , even though the US economy is booming. In fact, the Dow just had one of its worst weeks since 2014.
Already Tuesday saw a major selloff of worldwide stock markets, and in the US, the 2.6 percent drop in the Dow on Friday came after the Labor Department reported that 200,000 jobs were added to the economy last month (which was stronger than expected) and the unemployment rate stayed at 4.1 percent (which is the lowest rate since 2000).
Chevron and Exccon both lost more than 5% whilst Apple slid 4%.
For the week, the Dow fell 4%, while the Nasdaq and S&P 500 each slipped by more than 3%.
So how come?
Well, basically, traders fear that given the booming economy, the Fed will soon slow down its money printing even further, interest rates will go up again (the EU will slavishly follow what the US does in that respect, albeit with a year or two lag) and thus make it harder for people worldwide to borrow money and thus decrease spending on big ticket items.
<blockquote class="twitter-video" data-lang="en"><p lang="en" dir="ltr">News Alert: Dow drops below 26,000, on track for worst week in over 2 years. <a href="https://t.co/CaThyTh5La">pic.twitter.com/CaThyTh5La</a></p>— Fox News (@FoxNews) <a href="https://twitter.com/FoxNews/status/959445022079967232?ref_src=twsrc%5Etfw">February 2, 2018</a></blockquote>
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Furthermore, the market has gone up so much lately that a correction was long overdue.
Mr. Brian Barnier, head of analytics at Valuebridge Advisers, said investors sitting at home reading the headlines should not be spooked: "It's very important to separate trading activity from real investing activity."
"Mom and pops sitting at home… should not be concerned, given the massive run up in the market."
<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">Perspective: Yes, the stock market had an ugly day/week<br>But the Dow is still down just 4% from its all-time high.<br>We're not even in correction territory yet (a 10% decline)<a href="https://t.co/8bXFYc6wEv">https://t.co/8bXFYc6wEv</a> <a href="https://twitter.com/hashtag/stocks?src=hash&ref_src=twsrc%5Etfw">#stocks</a> <a href="https://twitter.com/hashtag/SellOff?src=hash&ref_src=twsrc%5Etfw">#SellOff</a></p>— Heather Long (@byHeatherLong) <a href="https://twitter.com/byHeatherLong/status/959530498103144449?ref_src=twsrc%5Etfw">February 2, 2018</a></blockquote>
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Source:
https://www.npr.org/sections/thetwo-way/2018/02/02/582809604/dow-plummets-more-550-points
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