Dow Jones down 4.6% - Worst fall since 2008

Graham_Devon

The Dow Jones Industrial Average has closed down by 1,175 points in the biggest one day fall since the financial crisis.

The leading US stock market index closed down 4.6% at 24,345.75.

It is the worst drop in points since September 2008 when a plan to rescue the US banking industry was rejected.

The decline extended losses on Friday, when strong wage growth data raised the prospect of accelerated interest rate rises.

Monday's sell-off surpassed a 777.68 points drop on the Dow Jones on 29 September 2008 when Congress rebuffed a $700bn bank bailout plan following the collapse of US investment bank Lehman Brothers earlier that month.

No real indication as to why though on the BBC.

Any thoughts? Seems people are guessing more than giving any reason, with "interest rates climbing higher" as one reason given.

Big fall anyway.

Thrugelmir

Higher wages. If overheads increase then profits decrease.

Rising wages = higher inflation.

Higher inflation = higher interest rates.

Fed unwinding it's balance sheet = normalisation.

michaels

Prices go to the level where buyers = sellers

[Deleted User]

Fears of inflation seem to be one reason, although thats surely no surprise in a "booming"economy?
FTSE was pretty steady today be interesting to watch it tomorrow.

Voyager2002

The Guardian made an attempt to explain what is happening: see
https://www.theguardian.com/business/2018/feb/05/why-are-global-stock-markets-falling

Personally I do not think that there is any kind of reasonable explanation, but am grateful for the best buying opportunity in ages. Christmas is a little late...

Keep_pedalling

Actually it is the worse fall since 2011. It dropped a lot more points today, but in percentage terms the fall was slightly smaller than the 4,62% drop on the 10th Aug 2011.

Over two days in 1929 the market only fell by 69 points but that represented a drop of nearly 25%, and that was nearly matched by the 1987 crash of 508 points (22.6%)

Graham_Devon

So basically good economic data is seeing stock markets across the world fall due to a fear over cheap money and emergency rates coming to an end.

Will prove we all got hooked on cheap money and low rates, if nothing else.

economic

The reason? Interest rates higher and expected to be higher throughout the term structure thus equity valuations were looking even more expensive then they already were.

chucknorris

I was planning on taking £100k out of equities at the start of the next tax year (only 2 months away), so the timing of this is a bit annoying. But if the market stays down (or even lower) in April, at least I can invest in my ISA and SIPP cheaply, and then hope to sell some non tax wrapped equities later in the year.

ChopperST

Will be interesting to see what the bond markets do. The reasoning for the correction is higher interest rates over the next 12-18 months which would mean that bonds would be less attractive also?

Filo25

ChopperST wrote: »

Will be interesting to see what the bond markets do. The reasoning for the correction is higher interest rates over the next 12-18 months which would mean that bonds would be less attractive also?

Bond movement was interesting, 10 year yield rose considerably during January (almost unnoticed it seemed), actually fell back yesterday presumably some selling of equities and rotation back into bonds.