Dow drops 550 points as stocks head for worst week in 2 years

[Bob The Knob]

[url]https://www.cnbc.com/2018/02/02/us-futures-move-lower-as-investors-worry-about-rising-yields.html[/url]
[quote]U.S. stocks fell sharply on Friday after a stronger-than-expected jobs report sent interest rates higher.

The Dow Jones industrial average dropped 550 points, with Exxon Mobil sliding 5.8 percent. The 30-stock index also fell below 26,000. Friday also marked the first time since June 2016 that the Dow fell at least 500 points.

The S&P 500 fell 1.8 percent, with energy as the worst-performing sector. The Nasdaq composite declined 1.5 percent as a decline in Apple and Alphabet offset a strong gain in Amazon shares.

"The key for the market today is rising interest rates," said Mike Baele, managing director at U.S. Bank Wealth Management. "The old adage is: 'Bull markets don't die of old age, they are killed by higher interest rates.' That looms large."[/quote]

[Untouch]

[img]https://puu.sh/zeNVo.png[/img]
the DOW does not look stable right now, this bubble is going to pop oneday

[Crazy Ivan]

[QUOTE=Untouch;53103265][B]snip[/B]
the DOW does not look stable right now, this bubble is going to pop oneday[/QUOTE]

Many of these problems are facilitated and exacerbated by trading algorithms and the intrusion of financial software in to the scene.

If (and likely when) the market takes a genuine nosedive, in a hundreth of a second an untold army of adding machine stockbrokers will sell in order to secure their company's value, which will only further damage the market.

I remember reading an article two or three years ago about how sudden shocks in stock value through the early 2010's were being caused by these programs being too finely tuned to dips in value and over reacting.

Oh boy. At least we've got a pretty nifty roaring 20's coming up with VR and genemods. I can't wait to see what life was like for my grandparents!

[Harbie]

This is mostly in response to strong job and wage growth in January. This means that people are anticipating the fed raising interest rates, which will increase bond yield. So investors are shifting money out of stocks and into bonds in anticipation of higher yields, resulting in a small market correction.

Also "worst week in 2 years" doesn't mean much when the stock market has been on a pretty much constant bull run for almost that exact length of time. There was a much larger correction 25 months ago.

tl;dr this is a small correction based on anticipation of an increase in bond yield due to high wage and job growth this month. Small corrections like this are healthy for the market.