The Dow Jones went down 2.5% when trading closed at the end of the last week, making it the most significant drop since Brexit was announced in 2016. Although the politics and economic structure of the United Kingdom might seem far away from American markets, the fact is that Britain remains one of the world’s largest economies, and a center of world finance.
Since the announcement of the United Kingdom’s intent to withdraw from the European Union, Wall Street recovered and we’ve seen incredible growth in the stock market for a period of almost two years. This latest decline has hit the Dow and the S&P 500 scores, and some investors could be nervous at what’s to come.
Dow Jones Falls But Tech Selloffs Hit Hard
Apple (NASDAQ: AAPL), the world’s largest company and a popular investment stock, fell as much as 4% last week. Not the only tech company to fall, Google (NASDAQ: GOOG) also dropped by 5%.
The American economy has been the success story of the past year, and the stock market has been riding wave after wave of continued success. Wage growth is up in the U.S., and there are more jobs being created. This made investors more confident, but some of that confidence has eroded as rates are now starting to creep up.
This doesn’t mean that it’s time to panic, but it could represent a time for investors to start looking at the better performing stocks. A company like Apple is still an excellent investment, and despite last week’s drop, there’s still good news in the form of a generous dividend that will be paid to investors. Apple has also pledged to repatriate offshore profits and us the money for investments within the U.S.
Still Opportunities and Good News in the Stock Market
Even with an overall decline in Dow Jones, there are still some companies that are performing well. Amazon (NASDAQ: AMZN), a company that seems to be unaffected by current market conditions, increased by 3% on Friday. Amazon has had an incredible amount of success thanks to a strong holiday season, and huge demand for in-house products like Echo and Alexa.
Exxon Mobil Corp (NYSE: XOM) is another interesting stock, and while it did drop around 5% at the end of last week, it could be a good option going forward. Buying in while prices are slightly lower could make for some good long term gains. The company is expected to perform much better in the coming year, especially as it eyes new ventures and investments. The company will also benefit from new drilling technology that allows for more efficient production, and drilling operations in areas that were previously inaccessible or cost prohibitive.
Now is a time for caution, but not panic. It’s also an excellent opportunity for new investors to learn about how the stock market responds to changing market conditions, selloffs, and uncertainty. A drop in the Dow Jones and major indexes can drop confidence levels, but, as Amazon has proved, there’s always something positive to find in the market, even when the headlines would lead investors to think otherwise.
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