Dow Continues Nosedive, Dropping More than 1100 Points in Three Days

The Dow dropped more than 300 points after a disappointing services economy reading, bringing its 3-day decline to 1,100 points. https://t.co/YYKMXj0pql

— CNBC (@CNBC) October 3, 2019

The most recent drop of 300 points comes after two days of combined 800 point losses. These come after a painful month of losses from all-time highs over $27,000. The Dow is currently trading at just over $26,000. 

Manufacturing Pains

The manufacturing slow down in recent months has had potentially unexpected consequences. However, the most grave for economists was the loss decline in services at a far greater pace than anticipated.  The ISM nonmanufacturing index reported a staggering 52.6—a far cry from the already low 55.3 that had been anticipated. The potential that the manufacturing weaknesses had bled into services sectors is not a genuine possibility. 

Tariffs Galore

Beyond the pains locally, the international upheaval has caused some consternation as well. Trump’s international tariff policies have led to trade wars in Asia, as well as threats from the EU.  Across both oceans, the tariff wars have increased, hammering on consumer and business confidence at home. And with Trump’s own tweet as evidence, many are calling for a dramatic change of pace. 

With the current government in the White House. The news of an economic drop of more than 1000 points in the stock market is caused by the President and his promoting a Civil War in our country. Perhaps he should take his own advice. pic.twitter.com/0zyovI95hy

— Victor Campbell (@writer2victor) October 3, 2019

Fed Drop?

The one silver lining in the bad numbers readings is the potential for a rate drop. The Federal Reserve (Fed) has already indicated that the market may require a drop in benchmark rates for buoyancy.  The new economic data has increased the potential for a Fed rate cut substantially. October’s rough start has also added to the indication, now standing at 93.5% confidence that a drop will occur.  Whether the Fed’s rate cut will have the necessary fuel to restart the economy remains to be seen. Nevertheless, the market will likely continue responding to the negative news as impacts of current fiscal policies are felt.  Think the rate drop will have the intended consequences and stabilize the economy, or will it be too little, too late? Let us know in the comments below! 

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