A lot of investors whether new or old probably know that Dow Jones Industrial Average is merely a stock market index. The Dow Jones Industrial Average is also referred informally to as Dow, and it is based on thirty large public trading companies at any one trading day. The phrase Dow stock is used by both investors and media to explain the general health review of the entire stock market. This work will discuss the trend of the Dow Jones Industrial Average in detail.
On 4th December 2018, the Dow Jones Industrial Average dropped down with over seven hundred points as a competitive market sell-off ruined any hope for a rebound. The day before had seen a moderate stock bounce back, and the investors were wondering on why the Dow Jones Industrial Average fell the day after. Earlier than this situation materialized, the White House had communicated of a non-permanent truce between China and the US (United States) who are famous trade enemies. Still, the American authority had quivered on, giving out concrete data outlining how China conceded at the G-20 summit when the truce was declared.
The US agreed to wait on the threat they had issued of increasing tariffs on The Chine goods. Still, judging on the statements issued by the delegates of the two countries, little was agreed on during that meeting. What succeeded was a disorder caused by the Trump administration and the White House advisor giving out dissimilar statements on when the hold on tariffs would commence. The discrepancies made investors ponder if there will be harmony between the two countries in the near future. The investors have lost faith, and the marketers are getting worried regarding a recession that is hinting to be around the corner.
During the same day, the yields of the 10-year Treasury bonds fell to the lowest level in a period of ten years. Although the yields for the ten-year bonds have been fluctuating over time, the investors are bothered this time since it has caused flattening of the bond yield curve. This means that the yields of two-year bonds and the ten-year bonds will fall. Moreover, it implies that there will be a reduction in inflation and the rate of betting interests in the next decade. These are warnings of a recession because they define the default financial atmosphere in such cases.
In conclusion, typically, up to when the yield curve turns around will the stock market enter a phase of aggressive sale-off. This hints that the yields of ten-year Treasury bond fall under those of two-year bond.