I'm a sci guy; I don't know a whole lot about economics. When I logged on to Yahoo today, there was a headliner that explained that the DOW dropped 500 points today. How bad is that? How normal is that?
2007-02-27 07:49:42 · 2 answers · asked by Clean Independent Energy 3 in Social Science ➔ Economics
A 500 point drop is not normal and is certainly high. However, the worst thing people can do is panic. The stock market has been rising steadily and it likely needed to fall a bit so that stock prices could return to a favorable level.
Bad is not the correct word to use. The underlying fundamentals (corporate profits, inflation, unemployment, interest rates) of the stock market have all been fairly steady.
Also, this all started on the Chinese stock market yesterday. China's stock market has been skyrocketing - way overpriced. So a worldwide downward correction has been somewhat expected. People just need to keep their heads on straight.
It is a potential buying opportunity in a few days.
.
2007-02-27 14:06:44 · answer #1 · answered by Zak 5 · 0⤊ 0⤋
A drop of this magnitude is an anamoly. I personally believe the market should come back in a little, and a small pullback wouldn't be bad. However a one day drop like this could very like scare people, and people who aren't active in the market may call whoever manages their money tonight and say I want out. So I believe it is very likely that we will see a continued selloff.
2007-02-27 16:44:48 · answer #2 · answered by Anonymous · 0⤊ 0⤋