Dow plunges nearly 700 points in response to good economic news. We can explain.
Stocks plummeted on Friday as a result of surprisingly positive news about the economy, a phenomenon that warrants further explanation.
In December, unemployment levels hit a low of 4.1%.
The stock market reacted anxiously. The Dow Jones Industrial Average finished the day with a 697-point loss, or a 1.6% decline. The S&P 500 fell 1.5% and the Nasdaq dropped 1.6%. Friday's performance put all three indexes in the red for the year so far.
There is a strong likelihood that the Federal Reserve will keep interest rates unchanged at their January meeting. Many investors are expecting that regulators won't order another rate decrease until the summer months. The Federal Reserve generally lowers interest rates to boost the economy and raises them to slow it down.
A robust employment report spells trouble for the stock market.
A strong job report "will be a positive development for the US economy and the US dollar, a disappointing outcome for the stock market," according to Seema Shah, chief global strategist at Principal Asset Management.
Other observers concurred.
"Potential investors, be prepared for increased market turbulence as investors adjust their expectations for reduced cuts," stated Gina Bolvin, President of Bolvin Wealth Management Group in Boston.
The metric has risen to 2.8% from last month.
As interest rates increase, the values of bonds decrease.
Today appears to be a more positive day for investors tracking the price of bitcoin. Its value increased by about 3%, as reported by CoinDesk, although it remains far below the $100,000 mark, still.
This story has been updated with fresh information.
This article, as reported in the USA TODAY newspaper, originally appeared.
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