The U.S. stock market opened lower Thursday morning, as a sell-off on Wall Street continued. The Dow Jones today fell more than 300 points in the first few minutes of trading.
The sell-off came after a volatile session on Wednesday as investors reacted to a jobs report earlier in the day from the U.S. The unemployment rate hit its lowest level in nearly 17 years, but wage growth was sluggish. The markets had also been worried about a potential trade war with China.
That’s not to say the news was too positive. The number of people out of work in the U.S. also fell to its lowest level in nearly 17 years. But investors are concerned that wage growth is not keeping up with the low unemployment rate.
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Market Snapshot
The price of stocks is going down, with the Dow Jones Industrial Average today falling more than 300 points in the first few minutes of trading. House prices also dropped in January for the first time since 2016.
The unemployment rate dropped to 3.8 percent, the lowest level since 2001, from 4.1 percent in December. That was also what investors were expecting. But wages fell, retail sales were down and optimism about the economy was weaker than expected.
Dow Jones Drops More Than 300 Points
The Dow Jones Industrial Average dropped more than 300 points at the open on Thursday, falling back under the psychologically significant level of 4000 for the first time since December 2016.
The blue-chip index fell as much as 383 points before closing down at 3973, a drop of 275.6 points or roughly 1.5%.
The sell-off came as investors reacted to a volatile session on Wednesday in which data released by the Federal Reserve, the Commerce Department and the Labor Department sent stocks diving and then rebounding.
The data was disappointing on a number of fronts, but the most alarming was wage growth and the fact that wage growth fell to its lowest level in nearly 17 years.
Why Is the Stock Market Falling?
Investors are worried that wage growth is not keeping up with the low unemployment rate and are concerned that the economy won’t be able to keep up with demand.
That has left investors trying to figure out what the Federal Reserve will do about interest rates. The Fed has already started to raise interest rates, and some fear that the central bank could go further and start reducing them.
Investors are also trying to figure out where the next trade dispute might come from. Economists worry that trade conflicts could hurt the global economy, but the U.S. is responsible for almost half of world trade.
Investors are also also worried about the health of the Chinese economy and the fact that U.S. companies rely heavily on all of the exports generated by the Chinese economy.
What’s Happening in the Market?
America’s stock market has been showing mixed signals for the past several months. On Monday, the Dow Jones fell more than 300 points before recovering most of those losses the next day.
On Tuesday, the blue-chip index dropped again and then again at the end of the day. A closely watched index called the Nasdaq Composite Index fell more than 4% on Wednesday.
Investors worry that the market’s volatility could lead to a correction, which is when the market falls 10% from its recent high and ends up finishing lower for the year.
A correction would be painful for stock investors, but it would be good for the overall economy because it would mean that corporations are struggling to sell their goods and services at a fast enough pace to keep up with consumer demand.
Bottom Line
Wall Street tumbled on Wednesday, with the Dow Jones Industrial Average falling more than 400 points. The falling stocks were also on investors’ minds when the unemployment rate fell to 3.8 percent, the lowest level since 2001, from 4.1 percent in December.
Stocks have been volatile recently, and investors worry that the market could be in for a correction, which is when the market falls 10% from its recent high and ends up finishing lower for the year.
That would be painful for stock investors, but it would be good for the overall economy because it would mean that corporations are struggling to sell their goods and services at a fast enough pace to keep up with consumer demand.
The U.S. economy grew at a solid pace of 4.2 percent in the third quarter, the strongest pace in nearly a decade. And the stock market is up for the year, with the Dow Jones today trading at $34,548. Because of this, analysts think that the best stocks to buy now are those grouped under the Dow Jones.
But there are some warning signs, too. Wage growth has been sluggish, and the Federal Reserve has been raising interest rates.
The Fed has started to worry about inflation and has expressed worry about rising wages.