Is Wall Street in Trouble? Indexes Are Down at the End of January

January 31, 2018
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Headlines hit on Tuesday morning with titles like Wall Street Falls; but investors shouldn’t worry when they catch up with the latest news. For the first time this year, the United States Stock Market has had a slight stumble, which comes on the tail end of the healthiest January in more than a decade.

Worried investors will be happy to know that we’re not talking a major crash or even a significant decline, however, the news is still worth noting, as it’s important to know about anything that could potentially impact current stock holdings.

Just How Far Has the Stock Market Skipped

Breaking through the hyperbole of the headlines, it’s clear to see that the stock market has stumbled rather than fallen.

Equities were the hardest to be hit, thanks to U.S. Treasury yields hitting the highest that they’ve been in years. The Dow Jones dropped 177 points, leaving it in a similar position to where it was in September of 2017. The NASDAQ closed on Monday, down just 0.52%, and the S&P rating dropped 19 points.

Slight decline could continue into Tuesday and possibly later into the week, but should investors be worried at this stage?

How Realistic is a Nightmare Scenario?

Treasury yields have a significant impact on the stock market, and the only way that the market is going to develop a significant problem, is if the 10-year yield hits 3%. At the moment it’s sitting around 2.7, which is a surprise for many analysts, who weren’t expecting this scenario to occur until much later in the year.

As interest rates go up, corporate financing becomes more expensive, regardless of the recent tax changes initiated by the President. This could have a serious impact on growth in the markets, and investors that jumped on the stock market in early January could end up getting hit, depending on exactly where they’ve invested.

Although nobody is predicting a significant slide or crash any time soon, investors should at least be cautious and aware of what is happening with interest rates, treasury yield, and the market as a whole.

Biggest Losing and Gaining Stocks After Monday’s Close (From Most Wall Street Actively Traded Stocks)

  • Apple Inc. (AAPL) dropped 2.07%
  • Ford Motor Co. (F) dropped 4.55%
  • Advanced Micro Devices Inc. (AMD) grew 2.86%
  • General Electric Co. (GE) grew 0.93%

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