Topics: Stock market, Dow Jones Industrial Average, Economics Pages: 2 (466 words) Published: February 5, 2014
The US Stock Market. Friday Jan 24th 2014 Close.
The week of Friday January 24th 2014 was a bad week for the US stock market. As market close Friday January 24th 2014, the Dow Jones industrial average was at its lowest falling by 1.96% making it the worst week since November 2011 moreover the S&P 500 and NASDAQ also fell by about 2%1 Hibah Yousuf, CNNMoney. The drop in stock prices was a result of slow economic recovery in the United States, EU region, and slowdown in China as well as emerging world economies like Argentina and Turkey. Although the economy forecasts for developed nations look promising, actual economic growth have been daunting since the 2007-08 financial crisis creating lower investor confidence. Low investors’ confidence as a result of slow growth in the US economy is bad for the stock market as investors opt for safer ways to keep their money. Therefore, this could lead to low companies performance/production, low consumer spending that ultimately put negative pressure on stock markets. The slowdown of Chinese manufactures for the first time in six months sent negative shock waves to the stock markets around the globe. Investors rush to dump their stocks around the world driving stock prices downwards, hence the decline in the US stock prices as measured by The DOW, S&P 500 and NASDAQ. As investors worry about another economy slowdown, they trade their stocks, and move their money to safer investment portfolios like bonds, treasuries and gold. Investors seek to diversify their risks by investing in bonds because bonds balances out the comparable risks of investing in portfolios of stocks. The US bonds prices have going up making bonds more attractive. Therefore the reality and speculations in the market that bond prices will continue to go up pushed some investors to liquefy their stocks and buy bonds instead with the hope that they can sell in the future at higher prices, even before the bond matures. So you have many investors doing...
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