Why the Dow Jones Industrial Average (.DJI) Is Tumbling Today

Page 1 of 2

What started out as a ho-hum day is turning into a rout. With roughly an hour left in the trading session, the Dow Jones Industrial Average (INDEXDJX:.DJI) is off by 95 points, or 0.62%.

Tracing the impetus for any day’s rise or fall is an inexact science at best. That being said, the one piece of news that could be weighing on equities this afternoon concerned a report that the trade gap expanded by 8.5% last month. According to the Commerce Department, the difference between imports and exports shot up to $40.3 billion in April from $37.1 billion the preceding month.

Dow Jones Industrial Average 2 Minute (INDEXDJX:^DJI)

Offsetting this, however, was yet another report that home prices are on the mend. CoreLogic, a California-based analysis firm, noted this morning that home prices grew by 3.2% in April and by 12.1% on a year-over-year basis. This adds to a growing bevy of evidence about home prices and sales that points to a recovering, though still ailing, housing market.

An article published on the blog DealBook provided some insight into the forces behind this move. “Large investment firms have spent billions of dollars over the last year buying homes in some of the nation’s most depressed markets,” the author notes. “The influx has been so great, and the resulting price gains so big, that ordinary buyers are feeling squeezed out.” Reading between the lines, the fear is that the recent ascent in prices is only sustainable so long as these investors remain active.

But housing prices and trade data aside, there was little else to explain the sudden downturn in the market this afternoon. Most financial news sites are attributing it to concern that the Federal Reserve will soon begin reducing its support for the economy. “We definitely think that equities are going to be more volatile with all the talk of Fed tapering,” a Boston-based investment strategist noted to Bloomberg News. “You can see that volatility in the market jitteriness in the past days. Add to that, that in this slow growth environment, you tend to have more hiccups that you would otherwise have if you were in strong growth phase.”

Whether or not this is the case, the reality is that daily movements like today’s — along with speculation about what the Fed will do at its next meeting — should be largely ignored unless you’re a trader on Wall Street. To make decisions based purely on speculation, rather than fundamentals, is to venture into a financial minefield.

In terms of individual stocks, Intel Corporation (NASDAQ:INTC) is continuing its upward climb today. Shares of the chip maker gained on Friday amid rumors that Samsung had chosen Intel Corporation (NASDAQ:INTC) chips for its latest flagship tablet. The early reports were confirmed by Samsung yesterday, sending shares yet higher. And today, it seems Intel has the wind at its back. At the time of writing, its stock is up by 1%.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!