Late Wednesday the stock market in the US started to fall unexpectedly, with NASDAQ, Dow Jones Industrial, and SP indexes all taking a hit. The interesting news is that seemingly nothing important started the tumble. Earnings reports from Q3 are arriving, and many companies have beat their estimates. We reported that Tesla (NASDAQ:TSLA) was so confident in their earnings they moved their reporting date forward then made the largest profit the company had ever reported (not that Tesla has ever been largely profitable in the past). Microsoft (NASDAQ:MSFT) had similar performance exceeding estimates and growing their all-important cloud businesses. AMD (NASDAQ:AMD) is one of the only tech companies that did not meet their investor’s expectations with their stock price falling 20% to $17 in after-hours trading, half of its peak value in the summer.
Before closing yesterday every single stock on the NASDAQ 100 had fallen, a very rare sight to see and noted as the biggest drop since November 2008. At opening bell today the DOW jumped 200 points after falling 600 yesterday, this type of volatility is not good for long-term trading on the market. The issue with stock prices fluctuating so much is that companies have a duty to their shareholders to earn as much money as possible, the hope is that the price variance does not affect the long-term management of operations.
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Speculation Among Investors
As with any drop in the market, there is always speculation about different economic outcomes, and because stock prices are so heavily weighed on speculation it could cause changes to the overall market as a result. Things are calming down in the market today, and although there is a lot of uncertainty because of trade policy and interest rate adjustments the hope is corporations still continue with business as usual until there is a strong reason not to.
There are still many earnings reports for Q3 to be published such as Alphabet, Amazon, Apple, Facebook and Nvidia that we will be highlighting. Everyone will be keeping a close eye on how the market reacts to the drop and if there will be any policies in place to prevent a larger crash in the future.
It’s worth noting that although the points drops have been large, fear-mongering in some quarters is being reigned in slightly by the fact that in percentage terms, we aren’t into the territory seen in previous market crashes, although still significant.
