Dow Sees 2nd-Worst Point Decline in Its History

But some experts say not to worry

By Michael Harthorne, Newser Staff

Posted Feb 8, 2018 3:18 PM CST
Updated Feb 8, 2018 3:47 PM CST

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Dow Plunges 1K Points as Market Swoons Again — Traders Peter Tuchman, left, and Patrick Casey work on the floor of the New York Stock Exchange, Thursday, Feb. 8, 2018. (AP Photo/Richard Drew)

The Dow Jones industrial average plunged more than 1,000 points on Thursday as a weeklong market swoon continued, the AP reports. Worries about inflation set the market rout in motion last Friday, and many market watchers have been predicting a pullback after the market's relentless march higher over the past year. The Dow dropped 1,032 points, or 4.1%, to 23,860. The S&P 500 gave up 100 points, or 3.8%, to 2,581. The Nasdaq lost 274 points, or 3.9%, to 6,777. Read on for more on what's behind the drop and how to think about it.

MarketWatch reports Thursday's point decline was the second worst in Dow Jones Industrial Average history. The index is now in "correction," which means it has dropped 10% from its recent peak on Jan. 26.
Michelle Singletary at the Washington Post says now is the time to spend money on stocks "like a holiday weekend sale," including people not currently invested in the stock market. Greg McBride at Bankrate.com agrees, saying the drop is normal "so hang in there and consider buying more."
Back at MarketWatch, experts say the drop needs to be looked at in context. "Seen over a longer period, the correction in the stock [market] is relatively small and is likely to have no impact on the macro economy," says the chief international economist at Deutsche Bank. Equity market capitalization is still up $5 trillion from where it was at the start of 2017.
CNBC reports American Express and Intel were the Dow's worst performers Thursday, with each dropping 5.4%. JP Morgan Chase was down over 4%.

There was still some good economic news Thursday, the Washington Post reports. Yum Brands, Cardinal Health, and Tyson Foods bested earning expectations, and Twitter posted its first-ever profit. Ironically, some experts believe it's that good news that's hurting the market.
Which leads to this tweet from President Trump on Wednesday: "In the 'old days,' when good news was reported, the Stock Market would go up. Today, when good news is reported, the Stock Market goes down." The Hill reports Trump told people selling stocks they were making a "big mistake."
Bearish sentiment in regards to the market has increased 6.3% to 35% of all individual investors, Reuters reports, citing the weekly American Association of Individual Investors survey. That means the percentage of individual investors in the US who believe stock prices will decline is at its highest point in three years.
Finally, CNBC explains why the stock market "turmoil" is likely to continue for a while. It has to do with global growth, central banks, and the US government's deficit spending.

(More stock market stories.)

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