The Dow Jones plunged 640 points on Monday, December 24 during shorter than normal hours due to the Christmas holiday. The sell-off was prompted by an unstable White House which reacted poorly to one of the worst trading weeks in ten years.
The S&P 500, NASDAQ and the Dow Jones all fell at least 2.2%, but the Dow Jones Industrial Average lost 2.85%, 640 points. These numbers declare the historic, harrowing losses experienced on Christmas Eve, pushing the stock market for a yearly decline of about 11%. If the year ends with such a decline it will be the worst year since the beginning of the financial crisis.
Investors are struggling to understand the forces that prompted the retreat, speculating on several possibilities all coming together to sow chaos and concern.
Treasury Secretary Steve Mnuchin called on six bank CEOs to try and reassure them and fragile financial markets after an historically poor week. It was a highly unusual move, which only made matters worse.
There is concern that President Trump is seeking to fire Federal Reserve head Jerome Powell. Trump is angry that the Fed has raised interest rates four times already and inquired of his aids if he had the authority to fire the Chairman of the independent Federal Reserve.
This might just be the end of the decade-long bull market which was helped to a great extent by loose monetary policy. From the 2009 low to the high of this past September, US stocks have climbed by 280%. But global growth is losing some steam, a trade war with China and others, and interventionist Fed policy are all coming together to accompany a new kind of stock market.
“Markets still under pressure from last week’s more hawkish Fed update, exacerbating fears about slowing growth and more expensive refinancing following years of stimulus,” said Michael van Dulken, the head of research at Accendo Markets.
The Nasdaq rose to its highest point in eleven years as optimism is mounting that the US economy is well on its way to recovery. The good news that fueled the Nasdaq rally was last month’s surge in the number of people hired, paving the way for what many analysts believe is a clear road to economic stability and growth.
The Nasdaq rose by 1.60 percent, reaching 2,905.34 on an increase of 45.66 points. Standard & Poor’s 500 Index grew to 1,344.66 as it surged by 19.12 points, or 1.44 percent. The Dow Jones industrial average climbed by 153.49 points to 12,858.90, which represents an increase of 1.21 percent.
Improved Economy Brings Higher Car Prices
The National Automobile Dealers Association is predicting that consumers are ready to pay more for new and used cars this coming year as the economy shows definite signs of improvement.
Used Cars in Demand with Low Supply
The NADA forecasts a rise of 6 percent for the average car to $30,000. An even higher price increase of 8 percent is expected for used cars, especially for SUVs and pickup trucks. For small second hand cars the price rise will be significantly lower, climbing by only 1 percent to an average price of $9,475.
More People Ready to Splurge
Luxury cars will most likely be in greater demand than in previous years as the economy keeps pushing forward, allowing people the confidence to splurge on more expensive cars. Used cars are in tight supply now because so few people purchased new cars during the years of the recession.
Paul Taylor, NADA chief economist, believes that US car sales will go up by 9 percent to 13.9 million in the year ahead. Low interest rates and enticing new products will most likely boost sales, according to Taylor.
As January ended yesterday Wall Street celebrated what investors there are saying was their best month since October, 2011. The optimistic attitude was maintained despite the disappointing weaker-than-expected performance which was reported in Tuesday’s economic reports, which surprised investors after a receiving a series of positive data about the economy in recent months.
According to the most recent data available, the Dow Jones Industrial average closed the session at 12,633.89, down 19.83 points or 0.16 percent. The Standard & Poor’s 500 Index was also down by 0.55 points, 0.04 percent to close at 1,312.46. The Nasdaq Composite Index finished up, however, by 1.46 points, or 0.05 percent, at 2,813.40.
The month of January ended up, with the Dow up by 3.4 percent, the S&P 500 up by 4.4 percent, and the Nasdaq finished in the black by a cool 8 percent.