What's Up (or Down) with the Stock Market?
On Monday, August 24th, the stock markets endured a series of gains and losses that left investors reeling and citizens questioning the stability of the economy. What happened and what does it mean?
Every indicator has been pointing towards 2015 as a year of increasing stability as the DOW showed that U.S. companies were growing. The catch, however, is that many American companies are able to grow and expand by selling their goods in other countries, namely China. So if China slows down, we slow down.
China’s economy began to slip as its markets slowed and became increasingly less stable. To top it all off, their attempt at righting the situation was seen as weakness and investors began selling their stocks creating a panic that economies were crashing. “Stocks are equity investments that represent part ownership in a corporation and entitles you to part of that corporation’s earnings and assets” (TheStreet
). With investors selling off their shares, it shows people are making quick decisions to get out of the market and protect their finances in the event of a major collapse. These massive selloffs caused the DOW to drop more than 1,000 points on Monday alone, the largest drop ever on a single trading day signifying the abrupt halt of growth and even potential crashing of the market.
While the losses did recover by about half later on Monday, uncertainty in the economy still abounds creating a huge potential for more losses. In regards to the housing market, potential homebuyers are growing weary of investing in a property with the stock market’s future still unclear. Housing prices and values are expected to dip yet again. So while we wait to see what the stock market does next, housing activity could slow significantly until we have some clarity on the future of the economy.