The Dow Jones Industrial Average (DJIA) traded with high volatility on Thursday, lowered by 1.5% at closing as investors contemplated the inflationary concerns, the Federal Reserve’s monetary policy tightening, and paltry corporate earnings releases. In the meantime, the S&P 500 lost 1.2% and the technology-laden Nasdaq Composite dropped 0.9%.
The Dow closed down 518 points, to 34,122, its first day-over-day drop in over two weeks. Market analysts also attributed today’s losses to the downtrend in the underlying retail sales data and lingering concern about rate increases.
Table of Contents
Inflation Concerns Resurface
U.S. Labor Department announced that the Consumer Price Index increased by a little bit in November, renewing concerns about inflation. The report has opened the potential for speculation that the Federal Reserve will continue an aggressive monetary policy through 2024.
Investors are dealing with an extraordinarily difficult economic climate,” said Sarah Jones, Wells Fargo senior market strategist. Even though inflation has cooled from last year’s peak, any suggestion of rebound is likely to be center stage for the Fed’s next moves.
Earnings Season Disappoints
Indeed, several companies ranked as leaders in the Dow Jones Index have disappointed in their quarterly results; in particular the major players in industrial and consumer goods.
Procter Gamble shares dropped 2.3 percent after the company reported sales drops in its international markets. Besides the above, Boeing shares fell by 3.1% as well, because the company announced production delays of 737MAX.
Apple dropped 1.4% and Microsoft lost 0.8%, playing a role in the Nasdaq’s downending.
Market Outlook
An examination of decreases today underscores the delicacy of investor confidence going into 2024. Sources tell us that the Dow Jones, up almost 8% so far this year, may go through more volatility if the government continues to be strong on price increases and the Fed restarts the climbing of interest rates.
The stock market manifests some of that broader anxiety about the economy, corporate behavior, and global political and military threats.
Although there has been a pullback today, some investors are optimistic and think the market will rebound in early 2024.
Key Takeaways
- The Dow Jones closed down 518 points -1.5% while the S&P 500 and Nasdaq declined.
- Concerns about inflation and poor corporate earnings continued to hang on to the markets.
- Analysts forecast future volatility as uncertainty around regulation at the Fed persists.
- With 2024 around the corner, however, the gaze will continue toward economic data, guidance by corporations, and what the Fed should be doing next.
