On Monday, December 2, there was palpable disappointment in the finance atmosphere as the U.S. stock market’s major indexes, including Dow, saw a sharp fall, the largest 24-hour loss in the last eight weeks. The loss has left quite a number of investors rattled as some believe that it might be an important factor in deciding how well or poorly the general stock market will end 2019.
For specifics, the Dow Jones Industrial Average (DJIA) ended the day at 27,783.04 points, losing 268.37, a 0.9% drop. A similar loss was seen with the S&P 500 as it lost 0.8%, shedding about 27.11 points to close at 3,113.87. The Nasdaq Composite Index, however, had the biggest percentage loss at 1.1% after it lost 97.48 points to finish at 8,567.99. One-day drops this sharp had not been seen since Oct 9.
Reports currently have it that the major reason for the loss was the weak manufacturing data with bad tales from the sector. Data from the Institute for Supply Management’s purchasing manager’s index showed that it fell from 48.3% in October to 48.1% in November. The acceptable standard sits at 50% and anything below is a sign that things aren’t looking good. TD Ameritrade trader strategy manager Shawn Cruz stated:
“The ISM report wasn’t encouraging, especially if you look at the new orders component. Construction also came in on the downside. This puts pressure on the other data points due this week, like the jobs number on Friday. Consumer sentiment will be another important data point on Friday.”
Another possible reason for the stock market loss is the persistently worsening conditions regarding the ongoing trade war between China and the U.S. Commerce Secretary Wilbur Ross recently said that U.S. President Donald Trump is already looking to put more duties on Chinese imports into the United States, if there is no workable deal between the two countries soon enough. On China’s end, the Xi Jinping administration has insisted that the U.S. must reverse the levies placed on its goods before any trade deals begin.
In addition to the China scuffle, Trump tweeted yesterday, that both Brazil and Argentina have enforced heavy currency devaluation which has adverse effects on American farmers. As a result, Trump says he will “restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries”, effective immediately.
On the brighter side, the monthly average for these indexes has seen interesting gains. Even though the indexes began their losses the Friday before, the drops didn’t leave them trading negatively for the whole month of November. The Nasdaq Composite shed 39.70, a 0.5% loss, but still pulled in a monthly gain of 4.5% as it closed at 8,665.47. The DIJA cemented a 3.7% monthly gain even though it lost 112.59 points representing -0.4%, ending at 28,051.41. The S&P 500 posted the least gain at 3.4% even though it also lost 12.65 points -0.4% – and finished at 3,140.98.