Sarang Ahuja’s latest post:
On Thursday, stocks saw a massive hit and the Dow Jones Industrial Average was down more than 300 points. The average gains for Dow was wiped out in and it ended their five month winning streak. According to Yahoo Finance, this was the biggest drop it has seen since February 3 and it is considered the worst single drop since April 10 of 2014. A couple weeks ago the all-time closing high was at 17,138 but after Thursday it was sitting at 16,563.
Also on Thursday, the Nasdaq was down 1.98% at 4,374,74 and S&P 500 was down 1.89% at 1,932 to end the day. Phil Pearlman, a Yahoo Finance editor, talks in the article that August is typically the worst time for stocks. This trend has gone on for 25 years and people were getting a preview of what could come ahead on the last day of July.
Many factors came into play why there was a voracious amount of selling. Argentina was unable to come to a deal with bondholders and because of it they defaulted on Wednesday night. Because of this, their benchmark Mervel saw their index drop over 6.5%. This is paired with continued issues with violence in the Middle East and trouble in Ukraine. Individuals are also worried about the possibility of inflation after the employment cost index saw it’s quickest rise since 2008.
The selling was rapid but didn’t hit panic mode according to Yahoo. They attribute the reaction to their understanding that buying every dip, these investors are built to “treat corrections as buying opportunities” even though there wasn’t much buying going on.
Pearlman mentions that if it turns into panic there will be plenty of investors who have full pockets with cash they can put into the market.
from Sarang Ahuja http://ift.tt/UQ8zP8