Markets closed Monday after a tumultuous trading day that saw U.S. stocks experience the sharpest decline in years, with both the Dow and the S&P 500 indices plunging more than 4.0 percent. Though both indices recovered on Tuesday, the Dow and S&P 500 had dropped significant points by the close of business on Wednesday, leaving the forecast uncertain for traders after three days of volatile conditions in world financial markets.
Stock prices began fluctuating late on Friday, but Monday's losses in the markets were historic in their magnitude. On that day, the Dow, notching its biggest intraday point decline in history, fell 1,175.21 points (4.6 percent), to 24,345.75, while the S&P 500 lost 113.19 points (4.10 percent), to 2,648.94 and the Nasdaq Composite dropped 273.42 points (3.78 percent), to 6,967.53.
The volatile conditions in the U.S. significantly impacted the activity of international markets, as traders around the world reacted to the sharp drop. Major markets in Asia plunged in reaction, with Japan's benchmark Nikkei 225 index falling 4.73 percent, or 1,071.84 points, to close at 21,610.24 and the Hang Seng China Enterprises Index, based in Hong Kong, losing 6.10 percent, or 822.11 points, to 12,657.72, on course for its biggest drop in seven years, since falling 6.2 percent in August 2011. South Korea's Kospi was down 2.3 percent to 2,433.049, while Australia's All Ordinaries lost 3.2 percent to 5,930.20.
Markets bounced back on Tuesday, with the Dow Jones jumping close to 1,000 points in its fourth largest single-day point increase in history. But the latest day of trading has ended with noticeable slips in major markets, after Wednesday closed with further drops. The stock market has remained in turmoil, with further losses in major indices throughout Thursday.
Experts seem to agree that the shocking tumble taken by the stock market on Monday was not caused by anything fundamental. "The key thing that I think people keep in mind here is that the market moves a lot very quickly, it doesn't mean fundamentals are changing that quickly," added Richard Bernstein, CEO of Richard Bernstein Advisors. "What you are seeing is the recalibration among investors that we actually are in a late-cycle environment."
Nevertheless, a number of issues lie at the center of the sudden decline, primarily centered on fears of rising interest rates and corresponding fears over rising inflation.
Additionally, this drop comes amid concerns that the Trump administration's aggressive expansionary fiscal policy could risk overheating the U.S economy in one of the longest bull markets in years. On Wednesday morning, the U.S. president gave his thoughts on the market's ongoing troubles through Twitter, stating: "In the 'old days,' when good news was reported, the Stock Market would go up. Today, when good news is reported, the Stock Market goes down. Big mistake, and we have so much good (great) news about the economy!"
- https://www.nytimes.com/2018/02/05/business/stocks-equities-dow-markets.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=span-ab-top-region®ion=top-news&WT.nav=top-news
- https://www.reuters.com/article/us-usa-stocks/wall-street-plunges-sp-500-erases-2018s-gains-idUSKBN1FP1OR
- https://www.ft.com/content/af1f8e4a-0a23-11e8-8eb7-42f857ea9f09
- https://www.nytimes.com/2018/02/05/upshot/context-matters-the-stock-market-drop-is-less-scary-than-it-seems.html
