Despite appearing resilient in the wake of the ongoing trade disputes between the U.S. and key trading partners, the stock market is now showing signs of vulnerability to tensions and tariffs that have been levied. The Dow Jones index recorded a loss for the 8th day running, and the so far stable NASDAQ has taken the worst dive since April.
How Bad Are the Numbers This Week?
At the end of trading on Thursday evening, the Dow Jones Industrial Average was down -196.10 points, or -0.80% across the index. The NASDAQ Composite Index was down -68.56 points, which equates to a -0.88% loss.
The Dow Jones index hasn’t been on a slide like this in decades. If the average falls into the negatives at the end of Friday trading, then it will be the longest losing streak since the late 1970s. While it’s important to note that prices are trending down, it’s equally important to understand that this doesn’t represent a stock market crash.
Index Performance Over 2018 So Far
To put things into perspective, we can look at the relative performance of the indexes this year.
The NASDAQ is still measuring 11.73% growth for the year to date, and 23.67% growth for the last 12 months.
The Dow Jones index is slightly worse off than the NASDAQ when looking at year to date figures. The index is now tracking at -1.04% since the start of 2018. 12-month performance paints a better picture, with a positive 14.32% increase.
The NASDAQ remains the better performer this year thanks to several surging tech stocks. Apple (NASDAQ: AAPL) is still up 9.59% for the year, Microsoft (NASDAQ: MSFT) is up 18.24% for the year, Amazon (NASDAQ: AMZN) is up a huge 47.95% for the year, and Alphabet (NASDAQ: GOOG) is up 10.63%.
These companies represent the top four spots in terms of market capitalization, and they’re all solid growth stocks. Long term investors don’t need to panic at this stage.
Stock Market Trade Fears Create Risk
The trade disputes could cause uncertainty not only this quarter, but for the last quarter of the year and potentially into 2019 and beyond. The good news is that the economy is still healthy with unemployment declining and many industrial sectors prospering.
Trade fears and shifts in investor confidence can create low-price opportunities, but it’s important to understand that risk is not a guarantee that stocks will take a prolonged hit. While the trade situation is not ideal, it’s still unknown whether the disputes can crash what has become a relatively healthy stock market in 2018.
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