Febrero 19, 2018

Asian shares tumble after Dow has worst day since 2011

09 Febrero 2018, 11:41 | Dolorita Barahona

Dow Falls By Record Number, Bounces Back

5 things you need to know now

The Dow closed at 24,912, a 2.33 percent gain, while the S&P 500 finished up 46.27 points to 2,694, a 1.75 percent increase.

The collapse of some popular financial instruments which sought to enable investors to make money by placing bets on the volatility of the stock markets attracted particular attention in the financial press in the recent days.

But no one said markets are logical.

Reason #1: This is not a bear market yet.

. All but two stocks in the broad gauge declined, Bloomberg reported.

Overnight, world markets followed the United States' lead and dropped.

"History suggested the S&P 500 was overdue for a pullback: 404 trading days had elapsed since the market last experienced a 5 percent drawdown, the longest stretch of time in almost 90 years!"

The US stock markets staged a recovery subsequently, with the Dow Jones Industrial Average rising by 567 points on Tuesday.

24/7 Wall St. tracks many fundamental factors in the economy and corporate America, as well as the larger economic picture globally.

Why does this matter?

"The share selling....reflects a higher than previously anticipated interest rate environment", CMC Markets analyst Michael McCarthy said. Traders rushed to the safety of the Treasury amidst the sell-off stocks, with the ten-year yield at 2.72% down 12 basis point.

"I would just say buy everything, don't get scared like all the other pansies", said Walker Abeyta, a senior finance and economics double major.

And that should lift stocks, making them a far better investment even if bond yields do drift above 3% over the next year or two. Letting out some of the air might even be healthy, some say. If you're a long-term investor and this remains no worse than a correction, "you don't lose if you don't sell". "When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done". Larger institutions use this method when they wish to quickly trade a large number of stocks at the same time, or to take advantage of a window of price discrepancies between markets - known as arbitrage.

The gains across the pond, however, did not spread to Asian markets, with the majority posting losses.

Though a dip had been expected for a while, USA losses seemed to spook global markets.

This dip in the markets does not mean another big recession is coming.

Japan's blue chip Nikkei 225 Stock Average entered a correction as the nation's shares posted the biggest decline since November 2016, following USA peers lower amid rising concern that inflation will force interest rates higher. In fact, more than $100 billion flowed into stocks globally at the beginning of 2018, according to Bank of America/Merrill Lynch data.

On Monday, the Dow had plunged by almost 1,200 points or 4.6%, triggering losses in Asia and Europe.

Shaken out of many months of calm, Wall Street braced for a higher level of volatility in the days ahead, after a roughly 2 percent rebound in US stocks on Tuesday followed the biggest one-day selloff in more than six years. Even though the market rise was unprecedented, the correction was just about 7.5% of market value, which is a relatively small correction.

But Jones noted the market could likely spike again before a correction settles in.

It is not clear how the changing economic currents, including tax cuts, will affect company financials ultimately, said Michael Bapis, managing director of The Bapis Group at Hightower, a wealth management firm in NY. On a basic level, inflation is the rise in prices of everything from rent to groceries to gas to college tuition.

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