Febrero 19, 2018

What is the Dow Jones Industrial Average?

07 Febrero 2018, 05:22 | Gervasio Siguenza

Trader Frederick Reimer works on the floor of the New York Stock Exchange Tuesday Feb. 6 2018. The Dow Jones industrial average fell as much as 500

Trader Frederick Reimer works on the floor of the New York Stock Exchange Tuesday Feb. 6 2018. The Dow Jones industrial average fell as much as 500

If the economy gets much stronger, it could touch off inflation, which has been mysteriously missing for the nine years of the post-crisis recovery.

David Madden, a market analyst at CMC Markets UK, said: "The volatility in the U.S. dollar is impacting the oil market, but while OPEC and the United States play back and forth in terms of curtailed supply and excess supply the energy market may hang around these levels".

The index, which is comprised of 30 big-name US companies, was down 108 points, or 0.4 percent, to 24,237 as of 11:25 a.m.

The Standard & Poor's 500 index was down 8 points, or 0.3 percent, at 2,639. The Nasdaq composite was down 6 points, or 0.1 percent, to 6,956.

It comes after the Dow Jones Industrial Average suffered its worst drop in more than six years on Monday. The blue-chip index ended lower by 4.6 percent - its steepest drop since August 2011, and is also lower for the year. Even after that trend reversed during the Monday sell-off, interest rates are still higher after this drop in markets (2.7 percent at Monday's close) than they were before (2.66 percent on January 26). That raised the alarm about higher inflation and, with it, potentially higher interest rates.

At its lowest ebb, the Dow was down 1,597 points from Friday's close. The Dow is up 24 percent over that time, the S&P 500 18 percent.

In Europe, Germany's DAX fell 2.3 percent and the CAC 40 in France lost 2.3 percent. Average hourly earnings, which had been rising at a modest 2.5 percent in the recovery, increased by 2.9 percent from the year before, the Labor Department said on Friday.

The steep drops Friday and Monday wiped out the gains the Dow and S&P 500 made since the beginning of the year, but both remain higher over the past 12 months.

On its way there, the Dow took several harrowing turns during the day, opening with a plunge of 567 points - coincidentally, the exact same amount it wound up gaining at the closing bell.

People are reflected on an electronic stock indicator of a securities firm in Tokyo Tuesday Feb. 6 2018. Shares tumbled in Asia on Tuesday after
People are reflected on an electronic stock indicator of a securities firm in Tokyo Tuesday Feb. 6 2018. Shares tumbled in Asia on Tuesday after

Reasons for the erratic trading are unclear to analysts and investors but some have said possible causes could be worries about rising bond yields and higher inflation coupled with elevated valuations, algorithmic trading, and a complacent investor base. We'll be in a "bear" market if losses reach 20 percent.

Why is it called the Dow Jones Industrial Average? . Health care, technology and industrial companies took outsize losses and energy companies sank with oil prices. Earlier the biggest markets in Asian fell between 1% and 2.5%.

The highest bond yields in years are making bonds more appealing to investors compared with stocks. The combination of economic growth in the US and other major economies, low interest rates, and support from central banks meant stocks could keep rising steadily without a lot of bumps along the way. Brent crude, the worldwide standards, lost 57 cents to $67.06 a barrel in London.

In other commodities trading, copper fell 3 cents to $3.19 a pound.

The VIX index of market volatility spiked by a record 116% on Monday, to the highest level in more than two years.

"That created a perception in the marketplace that inflation is right around the corner; that the Federal Reserve is going to start raising interest rates".

Earlier Tuesday, Asia's benchmark stock indexes collapsed, as Monday's massive selloffs on Wall Street rolled across the globe.

Other indices also declined.

First of Long Island gained a nickel after losing $1.05, while Hain Celestial fell 14 cents after dropping $1.69 in a day when red ruled the stock roster.

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