Business News

Struggling Global Markets Have Negative Effects on US Stocks

via Pixabay

On Friday, after declines in the European and Asian markets, stocks in the United States followed suit. The biggest casualties were seen in financial stocks, such as Goldman Sachs and Citigroup, as well as trucking and oil drilling stocks. According to MLive, the industrial average of the Dow Jones decreased by 367.29 points, which is equal to 2.1 percent, leaving the average at 17,128.55. As far as the Standard & Poor’s 500 index and The Nasdaq composite, the former dropped by 36.4 points to 2,005.55 and the latter fell to 4,923.08 points, losing 1.6 percent in value.

Although the market made gains during the first three days of last week, thanks to a rally, the losses from Thursday and Friday almost completely negated this relatively brief upswing. This slump in stock value in the United States can be attributed in part to investors who continue to worry about economic growth on a global scale, says CBS News.

Stocks fell across the globe last week after the central bank of Japan announced that it would be revising its stimulus program so that companies that are able to show an increase in hiring and investment overall will be offered more capital on exchange traded funds. This did not please investors, who responded with palpable disappointment at the Bank of Japan’s perceived lack of initiative.

Financial stocks in the United States took a sizable hit following the Federal Reserve’s announcement that it will continue to raise interest rates in the United States in 2016, albeit gradually. The effects of this information on investments was reflected in the $4,61 or 2.15 percent lost by Goldman Sachs, 95 cents or 3.2 percent lost by ETrade Financial and $1.08 or 3 percent lost by Citigroup.

Other stocks that slumped last week included Apple, which is currently the most valuable company in the world. The stock has fallen about a total of ten percent in the month of December, rising in value only three days out of the month so far. Used car dealership chain, CarMax, also showed less than impressive results this quarter, losing a total of 7.6 percent.

Last week’s slide in stock value reflects the trend in the global market two weeks ago. The market went through a slump due to the European Central Bank failing to satisfy investors with its attempt to increase stimulus efforts. Investors will continue to base their movements on those of the central banks, as the Federal Reserve is expected to continue raising interest rates in the United States and the European and Japanese central banks work on stimulating their respective economies.

They were looking for more, and when the market’s disappointed, this is what you get.

Some stocks which showed improvement last week included Darden Restaurants, which owns Olive Garden and other restaurant chains. The company’s stock rose steadily after Olive Garden’s sales rose and the company made a better profit than that which was predicted by analysts. In addition, increased earnings by Blackberry and RedHat, an open source software company caused the stocks of these two tech companies to climb.

Carnival, popular cruise line operator, also did much better than expected this year, which caused its shares to rise a total of 3.9 percent. Prices of oil and metals stabilized last week as well, with Benchmark U.S. crude rising 38 cents or 1.1 percent. At $35.33 a barrel in New York, oil is currently trading at its lowest price in nearly seven years. Natural gas dropped to its lowest value in 16 years on Thursday, climbing 1.7 percent to $1.78 per 1,000 cubic feet.

Mining stocks also recovered as metal prices changed their course on Friday morning. Gold creeped up by 2.3 percent, while silver added 2.8 percent in value and copper rose 3.1 percent. Also on the rise are U.S. government bond prices, although the value of the dollar dipped to 121.37 yen from 122.85 yen.

Even with the rise in the value of oil stocks, offshore oil drilling companies took a downhill slide. Transocean lost 5.7 percent, Ensco lost 7 percent and Diamond Offshore Drilling lost 3.3 percent.

The slump in United States stocks was reflected across the globe as the FTSE 100 index in Britain closed on a 0.7 percent drop, France’s CAC 40 fell 1.5 percent, and Germany’s DAX showed a decrease of 1.7 percent. In Japan, Nikkei 225 sank 1.9 percent, Kospi in South Korea slipped by 0.1 percent and Hang Send in Hong Kong ended the week 0.5 percent lower.

Click to comment
To Top

Hi - We Would Love To Keep In Touch

If you liked this article then please consider joing our mailing list to receive the latest news, updates and opportunities from our team.

We don't want an impostor using your email address so please look for an email from us and click the link to confirm your email address.