Dow ends with largest drop ever

[BmorePat87]

https://www.politico.com/story/2018/02/05/trump-stock-market-down-324880

The Dow ended the day down 1,175 points but at one point was down nearly 1,600. This is the largest drop in history, though not the largest drop percentage wise (Black Monday saw the Dow down 23%). The 4.6% drop is still not quite the 7% drop that was experienced in 2008.

The Fed is expected to keep raising interest rates to combat inflation as the government plans to borrow more in 2018 with tax revenue down thanks to the tax cuts. Higher interest rates will also lessen some of the benefits of proposed wage increases and bonuses in the wake of the cuts.

The other unknown is whether Congress can agree on a debt ceiling plan before the deadline.


Hopefully things will settle down, but I'm not sure if anyone has a plan to ensure that.

[Belsnickel]

(02-05-2018, 08:49 PM)BmorePat87 Wrote: https://www.politico.com/story/2018/02/05/trump-stock-market-down-324880

The Dow ended the day down 1,175 points but at one point was down nearly 1,600. This is the largest drop in history, though not the largest drop percentage wise (Black Monday saw the Dow down 23%). The 4.6% drop is still not quite the 7% drop that was experienced in 2008.

The Fed is expected to keep raising interest rates to combat inflation as the government plans to borrow more in 2018 with tax revenue down thanks to the tax cuts. Higher interest rates will also lessen some of the benefits of proposed wage increases and bonuses in the wake of the cuts.

The other unknown is whether Congress can agree on a debt ceiling plan before the deadline.


Hopefully things will settle down, but I'm not sure if anyone has a plan to ensure that.

I don't have hope on things settling down. We're due for another recession, and we've made it so we don't have the fiscal tools in our toolbox that we normally use to right the ship. I don't think this is going to turn out well.

[SunsetBengal]

"Money people" on the radio were explaining that after periods of unprecedented growth, often follow with a "market correction", typically around 10%.

They went on to explain that when periods of large growth happen, many short term investors see that as a time to "cash out".

I'm not positive as to the validity of those statements, but they made sense when I was listening.

[Belsnickel]

(02-05-2018, 09:41 PM)SunsetBengal Wrote: "Money people" on the radio were explaining that after periods of unprecedented growth, often follow with a "market correction", typically around 10%.

They went on to explain that when periods of large growth happen, many short term investors see that as a time to "cash out".

I'm not positive as to the validity of those statements, but they made sense when I was listening.

I've been saying for a while now that the market is cyclical. The market has grown a lot since the recession, and so it is about due for a downturn.

[StLucieBengal]

(02-05-2018, 09:41 PM)SunsetBengal Wrote: "Money people" on the radio were explaining that after periods of unprecedented growth, often follow with a "market correction", typically around 10%.

They went on to explain that when periods of large growth happen, many short term investors see that as a time to "cash out".

I'm not positive as to the validity of those statements, but they made sense when I was listening.

Plus all the programs that are set to sell once hey hit a certain amount of growth.

[Au165]

(02-06-2018, 12:21 AM)StLucieBengal Wrote: Plus all the programs that are set to sell once hey hit a certain amount of growth.

Stop orders aren't something that really get done at large institutional levels to sell off growth (hit a certain price and sell). They are normally what are called relative stop losses that basically sell on the fall after hitting run ups. This also wouldn't be aligned across multiple sectors and brokerages either and so I am not sure it has any real barring here. 

[GMDino]

I don't know why any of you care about the stock market going up or down.

The POTUS does not!

https://www.marketwatch.com/story/what-the-trump-white-house-says-about-this-sharp-stock-market-reversal-2018-02-05

Quote:With Donald Trump’s propensity to take credit for a rising stock market since his November 2016 election[/url], via tweets and retweets as well as at rally-type events, journalists and pundits alongside much of the public were eager to learn how the president would address [url=https://www.marketwatch.com/story/with-3-day-selloff-stocks-quickly-approach-correction-territory-2018-02-05]sharp declines in equities last week and an intensifying selloff Monday.



Press secretary Sarah Huckabee Sanders put that anticipation to rest by late afternoon, indicating that the stock market had never been a particular focus of the White House, while longer-term economic fundamentals were and are of paramount interest:

Quote:‘The President’s focus is on our long-term economic fundamentals, which remain exceptionally strong, with strengthening U.S. economic growth, historically low unemployment, and increasing wages for American workers. The President’s tax cuts and regulatory reforms will further enhance the U.S. economy and continue to increase prosperity for the American people.’

The Dow industrials DJIA, -4.60% lost more than 1,100 points Monday and were down as much as 1,500 intraday — that on the heels of a Friday decline of nearly 666 points that took the blue-chip index’s weekly decline to 4.1%.

[StLucieBengal]

(02-06-2018, 10:11 AM)Au165 Wrote: Stop orders aren't something that really get done at large institutional levels to sell off growth (hit a certain price and sell). They are normally what are called relative stop losses that basically sell on the fall after hitting run ups. This also wouldn't be aligned across multiple sectors and brokerages either and so I am not sure it has any real barring here. 

Was brought up on multiple business channels by analysts.

[Griever]

i think we can all agree that if trump wanted credit on the rise, he deserves the blame for the fall

[GMDino]

(02-06-2018, 10:58 AM)Griever Wrote: i think we can all agree that if trump wanted credit on the rise, he deserves the blame for the fall

And that most sane people know the POTUS really shouldn't get too much credit/blame for either.

[Johnny Cupcakes]

Without being too doomy and gloomy here, it's only a matter of time before the market takes a significant downturn. It's hard to maintain dramatic growth for as long as we have.

[Vas Deferens]

(02-06-2018, 10:58 AM)Griever Wrote: i think we can all agree that if trump wanted credit on the rise, he deserves the blame for the fall

It would be treasonous not too. 

[Belsnickel]

(02-06-2018, 10:58 AM)Griever Wrote: i think we can all agree that if trump wanted credit on the rise, he deserves the blame for the fall

(02-06-2018, 11:10 AM)GMDino Wrote: And that most sane people know the POTUS really shouldn't get too much credit/blame for either.

(02-06-2018, 12:19 PM)Vas Deferens Wrote: It would be treasonous not too. 

Yeah, it's silly for a president to really try to claim anything on the market. One, there are too many factors. Two, the market is not the economy. Three, if you try to take credit you are going to own blame.

(02-06-2018, 12:08 PM)Johnny Cupcakes Wrote: Without being too doomy and gloomy here, it's only a matter of time before the market takes a significant downturn. It's hard to maintain dramatic growth for as long as we have.

You're fine, I've been saying the same thing for a while, now.

[Au165]

(02-06-2018, 10:49 AM)StLucieBengal Wrote: Was brought up on multiple business channels by analysts.

I'm just telling you what I learned in college from a professor who was a higher up at UBS once upon a time. Maybe they were referring to some sort of retreat triggering trailing stop losses, but either way it shouldn't all trigger at once to create this hard of a pullback.This is most likely market sentiment driven more than technical based on everything going on.

[Goalpost]

The stock market is based on valuation/pe. Companies are still reporting good earnings. But as to why it is happening now...the market has gotten ahead of itself. I also think interest rates will uptick, it's inevitable, and this will hurt consumer purchasing power. People will still buy, on dips, quality companies. If earnings were declining we'd be in big trouble, that's not happening though.