Why Stock Market is Down Today
Despite the news that the economy is on the mend, the stock market is still down
today. The Dow Jones Industrial Average is down about 2%, while the S&P 500 index is down about 1%.
Dow Jones Industrial Average
Whenever you hear the word Dow Jones, you are probably thinking of a stock index. The Dow Jones Industrial Average is an index that tracks 30 leading U.S. companies. The index is a good indicator of the overall health of the stock market. Dow Jones is a price-weighted index, meaning it is based on share price. It is one of the oldest stock indexes in the world. It was created in 1896 by Charles Dow, a former editor of The Wall Street Journal. He envisioned the index as an equalizer. The index has evolved into a diverse, global snapshot of the stock market.
The index is maintained by S&P Dow Jones Indices, which is a subsidiary of S&P Global. This index management company selects the stocks that make up the index. It is also the parent company of Dow Jones Trademark Holdings LLC. The index is weighted according to price, market cap, and the number of outstanding shares. Most stock market indexes are weighted this way. The Dow Jones Industrial Average is not as comprehensive as the S&P 500.
While the Dow Jones Industrial Average is a useful indicator of stock market performance, it’s important to know that it isn’t a perfect barometer. It’s also important to know that it’s not the only index. The Dow Jones index is influenced by corporate reports, political events, and domestic events. It’s also influenced by the technology sector, which has grown rapidly. In fact, the Dow has been slower to evolve in recent years, due to the rise of the technology sector.
Dow Jones has been around for over 140 years, but it has changed its composition several times in the last decade. In 2018, General Electric was dropped from the index, and Walgreens Boot Alliance replaced it.
S&P 500 index
Buying stocks is a risky business, but investing in the S&P 500 index is a good way to get an idea of how the economy is performing. In the last seven years, the S&P 500 has gone on an eight-year bull run, which boosted prices.
Historically, the S&P 500 has returned 9% a year. However, the return is higher when you invest for a longer period of time. A bear market is a period of declining stock prices. When you buy a stock during a bear market, you take on extra risk. This risk is usually recouped when you sell. However, investing for a longer period of time allows you to smooth out the volatility of the market.
One of the best ways to get an idea of how the S&P 500 is performing is to look at the weighting formula. The weighting is determined by the market capitalization of the companies listed in the S&P 500. Larger companies are weighted more heavily than smaller ones.
The weighting formula works by dividing the market cap of each company by the total market cap of the S&P 500. For example, Goldman Sachs has one-fourth of the market cap of Walmart. However, Walmart’s share price is $125 per share. The result is that Goldman Sachs has twice as much influence on the Dow as Walmart does.
The S&P 500 index is considered to be a better indicator of overall stock market performance than the Dow Jones Industrial Average. But it’s important to note that the S&P 500 doesn’t offer any guarantee of returns. It’s only as good as the companies that make up its index.
The S&P 500 index has been on a bull run for eight years, but it could go on a downhill slide. The Federal Reserve is expected to continue raising interest rates and causing businesses to feel the pinch. A bear market can last for years.
Usually, the aforementioned has to do with the stock market and its ilk. But, the Nasdaq Composite is not the only stock exchange in town. In fact, the NASDAQ has a sizable footprint on the stock market. In particular, the NASDAQ stock market is known for allowing investors to trade stocks in fractional shares, which is an attractive proposition for many investors. Using a broker that offers this type of service will make your investment portfolio stand out from the crowd.
In fact, the NASDAQ actually has a number of different indexes that track specific sectors of the stock market. These include the NASDAQ composite, NASDAQ smallcap index, and NASDAQ large-cap index. Each of these indexes is designed to provide investors with a well-rounded view of the stock market. The NASDAQ smallcap index includes the hottest companies in a specific sector and the large-cap index tracks the more established stocks.
The NASDAQ small-cap index is also known for its high volume of daily trades, which may be a boon to some investors. One of the largest concerns with the NASDAQ small-cap index is that it tends to underperform during the market’s biggest swings. The NASDAQ large-cap index, on the other hand, tends to perform better during these times of recession. Moreover, the large-cap index also tends to boast of a more diverse portfolio of stocks, which is a win-win for the investor who is looking for a low-cost way to gain exposure to the market’s most dynamic companies.
The NASDAQ small-cap index may be an elusive beast, but it has its fair share of winners. The NASDAQ small-cap index, for example, has seen more than a hundred new stocks added to its fabled fledge in the past five months. For example, UAL Corporation has been replaced by FLIR Systems Inc.
Earlier this year, crude oil prices hit a record high of $102 a barrel. However, they have since dropped by nearly 50 percent. There are two primary reasons why oil prices fell: supply and demand.
The Organization of Petroleum Exporting Countries and its allies agreed to cut production quotas by 100,000 barrels a day in November. This move comes amid concerns about the global economy. In addition, oil prices could fall in the event of a recession.
The US dollar has been stronger against other currencies, which helps reduce demand for oil overseas. The price of oil becomes more expensive for businesses and individuals in countries with weaker currencies. In addition, geopolitical tensions can affect supply. For example, Russia has been subject to sanctions, which could limit its oil production. The European Union has a ban on Russian oil imports that will go into effect Dec. 5.
OPEC’s decision to cut production may be an attempt to reduce the cartel’s profits. However, non-OPEC suppliers could be forced to pay higher extraction costs. Amid these concerns, the US Fed raised interest rates by 75 basis points on Wednesday. While some analysts have hoped for a slower hike in rates, some Fed officials have made a few remarks that have weakened hopes.
OPEC’s decision to cut oil production is a clear signal of concern about the current supply and demand for crude. OPEC’s decision to cut production also comes amid fears of an economic slowdown. If oil prices fall, importers will benefit from lower input costs. However, exporters will take a hit because of the loss in revenue. This will likely cause a fiscal deficit in most countries.
OPEC+ holds a policy meeting on Dec. 4. Saudi Arabia and other countries are expected to announce their intentions to keep their daily production limits at 30 million barrels a day.
Among the deadliest pandemics in recent times, COVID-19 has killed millions of people, including hundreds of thousands of children. The virus first emerged in China and has since spread around the world. The outbreak has shattered lives in many countries, as well as the financial markets.
In the United States, the first COVID-19 case was reported on January 21, 2020. Since then, there have been more than 2 million confirmed cases and millions of deaths. This pandemic has impacted many economies, and has caused billions of dollars in losses to the world economy.
During the first half of 2020, many economies in the developed world were negatively impacted by the disease. Unemployment rates rose, and many economies shrank by a quarter or more of their GDP. Globalisation amplified the effects of the COVID-19 pandemic. The disease impacted many industries, and its effects on stock returns varied from country to country.
According to Maneenop and Kotcharin (2020), the first COVID-19 case in a country can cause abnormal returns in the short term. The severity of the effect is influenced by the severity of the disease, as well as by the different lockdown policies in place. The study evaluated the effect of COVID-19 on 21 stock indices of major affected countries.
While the study focused on the impact of COVID-19 on airlines, other industries may provide negative returns. The transportation industry, for example, saw significant negative CAAR. In some countries, including France, the market did not show a negative AAR after the peak of new cases.
While the effects of COVID-19 are still uncertain, research is needed to assess the effect of the disease on the stock market. For example, future studies should examine the effect of different COVID-19 variants.