What is the significance of today's 416 point drop at the NYSE?

Answer 1

The market has been going pretty much straight up since last summer. That's somewhat unusual. Usually the market has some periods of declines (called corrections or consolidation) in between periods where it goes up. I think the stock prices went a little too high relative to the earnings of the companies. I've been expecting a significant drop for a few months now and was actually surprised it took this long. I do not believe it is something to worry about in the long term. I would not be surprised to see the market drift generally downward for as long as 2 or 3 months, maybe as low as 11000-11300 on the Dow, but after that, I would expect it to resume rising.

I personally would not invest right now. I'd wait a month or so for the market to drop more, but at that point, I'd certainly buy more stocks.

Answer 2

Probably caused by two things;

The Chinese Market crashed because of some rumors about tighter government controls.


Greenspan announced yesterday that the U.S.Market would crash by the end of 2007.

Since the market has been riding high for no substantial reason for the last couple of years, a "correction" is long overdue. This might just be that, or it could be that the groundless increase in the trading price of stocks has come to an end, and a recession is starting.

A recession is when you go broke, a depression is when I go broke...

Answer 3

Macroeconomic shocks to our economic way of life are not just centered on domestic issues anymore. We are a global economy, like it or not. It is in our best interest to look at economies worldwide. How significant is this? Very. Any money you have in the market is affected by our world - especially Asian markets.

Answer 4

This was a market correction. The market fell because investors are worried about a global economic slowdown.