Dow Drops 600+ Points, Tech Sector Leads Losses
Just under a week ago the markets saw sharp increases after midterms elections resulted in a split congress. However other news has dampened that party, leading the Dow Jones Industrial Average to lose as much as 600 points during today’s trading session. While there are many factors fueling the sell-off, commonly cited culprits include Apple, the rising dollar, and — if you’re the President — the Democrats.
Starting with the lattermost option, today President Trump took to Twitter to blame the market woes on his opposing party. The President wrote, “The prospect of Presidential Harassment by the Dems is causing the Stock Market big headaches!” Trump is likely referring to reports that, with the House of Representatives soon to be under their control, Dems are expected to start utilizing that government body’s subpoena power to probe the administration on numerous fronts. However, as CNN Business notes, it’s unclear that the president’s assertions are accurate considering comparable history (as far as there is any) as well as the fact that the market reacted positively to the promise of government gridlock that solidified itself last week.
In terms of companies, Apple was a notable loser this morning, shedding nearly 5% to reach a 90-day low. This dive comes as Lumentum — a supplier used by Apple to create its iPhones — lowered their sales forecast. Additionally JP Morgan Chase downgraded Apple’s stock. This seemed to have an effect on other tech companies, with Amazon and Tesla down 4.5% and 5.5% respectively at press time.
Zooming out for a moment, another likely factor in the current market slump is the strength of the U.S. dollar. Although having a strong currency would seem like a good thing, the problem is that a rising dollar can be unfavorable to American companies who do business abroad. CNN Business notes that the dollar has hit a 16-month high, partially due to fears in Europe in regards to the increasingly messy Brexit situation.
As of this writing, the Dow is currently down more than 2.3% for the day while the NASDAQ has fallen 2.75%. While it’s always worth looking at the reasons behind these day to day point swings, it’s also important to look at the larger picture. For example, some of the challenges the market faces today are actually due to a strong economy — one that’s recently posted continued jobs gains, wage growth, and GDP growth, in fact. To that point, panic may be premature as markets have grown more volatile in recent months. That said, we’ll see what tomorrow brings.