by Kelly Wert
The Dow Jones Industrial Average, a stock market index of 30 large American companies, has had an erratic week. At the beginning of 2018, the Dow reached a record high of 26,616.71 points on January 26, inspiring great confidence in the market. However, shortly after this record growth, the Dow hit records of a less appealing sort as it plunged over 1,000 points on Monday, February 5, recovering slightly, then suffering another 1,000 point drop on Thursday, February 8, putting it on pace to have its worst week since the 2008 financial crisis. Experts have speculated that the volatility has been caused by concerns over rising interest rates, and while some are now saying the market is on track for a correction, the immediate future of the Dow and the stock market in general remains unclear. Below is a roundup of views on the Dow’s capricious week.
Market Watch provides a numerical summary of the Dow fluctuations this week, as well as the parallel changes in the S&P 500 and the Nasdaq Composite Index.
The Guardian attributes the stock market fluctuations to five factors: rising wages, interest rates, rising U.S. government budget deficit, profit taking, and machines. The article cites changes in the economy as well as changes in trading strategy as possible reasons for the declines.
NPR cites some financial analysts views that this correction is good for the economy, as a unchecked inflation could just lead to a worse bubble pop later.
Daily Herald forecasts that although the stock market decline looks bad today, rising GDP will lead to stock market increases in the long run. They also pointed to the “natural ebb and flow” of the stock market, meaning this volatile week should not be cause for long term concern.
Trump has claimed that good news about the economy caused this stock market downturn. He was critical in a tweet of this contradictory occurrence.
USA Today provides a reminder that politicians who take credit for stock market gains must also accept credit for losses. Earlier this year, Trump boasted about the Dow’s record highs as a sign that his policies are reviving the economy, but he has not taken responsibility for the recent decline.
Kelly Wert is a freshman in the College studying Political Economy who writes about domestic and international policy issues.