North Korean Nuke Testing and Oil Price Fall Plunges Dow Jones in First Week of 2016
Investors in Dow Jones were affected by rising global issues that saw stocks plunge in the first three days of trading starting Wednesday. Investors were also impacted by Federal Reserve's reservation about raising interest rates.
According to MarketWatch Dow Jones finished 252.15 points lower at 16,906.51 and this would be the first to close below the 17000 level since October 2015. S&P Index went sliding 26.45.points to 1900.26 making it the first to close below 2000 mark since mid-October 2015. Nasdaq fell 55.67 points to 4835.76. The factors impacting stocks falling include crude oil prices and North Korea's claim to have completed their 4th nuclear test and slowing of growth.
Shares declined after Federal Reserve's meeting minutes showed reluctance to raise interest rates. Federal Reserve apparently doubted the raising of interest rates because inflation showed signs of rising.
Notwithstanding Federal Reserve's Vice Chairman Stanley Fischer's remarks, investors were "fixated on global issues that loomed large over the market this year". Companies which had their stock prices falling include Transocean, Schlumberger, Chevron Corp, Apple, Yahoo.
IBTimes took notice of the yield on the benchmark US 10 year Treasury falling 3.16% Wednesday. It stated bond yield falls when demand for US debt increases.
Global oil price hit the lowest price since June 2004 Wednesday as production continues its dogged rise. The conflict arising between Saudi Arabia and Iran set price of Brent Crude to $39 Monday.
The concern for China's slowdown and a global commodities route lingers as a backdrop to oil overproduction. Data showed US adding 10.6 mil barrels for the week ending Jan 1 more than 7.1 mil barrels estimated by American Petroleum Institute. This impacted price per barrel to fall for West Texas Intermediate Crude and Brent Crude.
Markets in Europe closed lower on Wednesday impacted by the same factors. Meanwhile, indexes in Asia namely, Hang Seng and Nikkei fell as well.
CNN noted that price of gold went up 1.4% to $1.093 per ounce. The basis being that gold had a tendency to rise during times of fear.
Wall Street's mini panic attack, this time, around came after North Korea claimed to have successfully tested a hydrogen bomb. However, CNN clarified that US officers told CNN that it could take days to determine if North Korea's claims are legitimate.
If the claims are true the test would represent a major advancement by the North Korean regime and would be a geopolitical threat on top of the current Saudi Arabia and Iran conflict.
Oil prices are down resulting from the strengthening of the US dollar and diminishing of chance OPEC cuts production. The other factor includes concerns about demand from China.