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During 2017 the stock market in the United States had one of the best years that it had in a long time. The stock market was influenced by a variety of factors that included tax law regulation changes, improvements in jobs data, and great earnings from many different companies. While 2017 was a good year, 2018 has been far more volatile.
The start of 2018 was just as good as 2017. The Dow Jones Industrial Average increased to its highest point of all time by hitting 26,000 points. While January was great, the month of February has been far different. During February a few piece of negative information hit Wall Street and it sparked a panic sell. During the week of February 5-9, the US stock market had its two worst days on record ever.
While the stock market appeared to be in free fall during the first week of February, it now appears that the declines have stabilized and values are beginning to get back to where they were a couple of months ago (https://www.marketwatch.com/story/dow-on-pace-for-4th-win-in-a-row-as-market-braces-for-inflation-data-2018-02-14). Just a couple of days after the markets declined considerably, all of the major indices are back up several percent during the second week of February.
The increase in values in the US stock market is attributed to a range of different factors. One of the main reasons is that there have been very good earnings results released. Over the past few weeks many different US companies, including those in the tech, auto, and other industries have reported earnings that were far greater than estimates. This has helped to fuel optimism over future growth for many companies.
Another reason that people are buying back into the market is that it appears that the stock market drop could have provided a lot of value. Many notable companies, including some of the top tech firms in the world, saw that their stock values had declined by more than ten percent over just a couple of weeks. While this makes some people jittery, those that are looking for value found those stocks to be great target options.
While the stock market has increased in value, there is still plenty of concern over the future. There are several upcoming factors that could lead to a rise in volatility.
During 2017, the stock market in the United States saw one of the best years on record. Shortly after the election of Donald Trump, a variety of pro-American regulations were set forth that did great things for business. Throughout the year, continued regulation changes and an overall improvement in the economy sent stocks soaring. While this continued for the first month of 2018, February has gotten off to a terrible start.
During the week of February 5 through 9, the stock market had one of its worst days on record. Prior to the start of that week, there had never been a 1,000 point drop in the Down Jones Industrial Average. However, that week alone saw two days with a drop of that magnitude. The reason for the decline is still not completely clear. After receiving some less than ideal news when it came to jobs data and earnings results, the stock market started to drop. This triggered some panic selling and volatility hast peaked to its highest point in years.
After a devastating week on Wall Street and for investors across the world, it appears that the week of February 12 was off to a good start (https://www.cnbc.com/2018/02/12/us-stock-futures-dow-data-earnings-and-politics-on-the-agenda.html). While the major indices are still 5-10% off of their all-time highs reached just a few weeks ago, it appears that the big drops may be behind us. On Monday, February 12, the Dow Jones increased by more than 400 points.
While the increase in stock market value is a good thing for investors, and much better than another big decline, financial experts are concerned about another wild swing in stock values. Those that are close to the market and have seen a lot of different markets in the past believe that the stock values could continue to be volatile for the foreseeable future. This could include seeing a big drop again in the coming weeks before prices finally stabilize. However, people are not urged to exit the market entirely. Overall fundamentals in the market are still strong and a rebound is bound to be on the way.