Dow Braces for One-Day 1,000 Drop, as Markets PlungeSubmitted by meekandmild on Tue, 02/04/2014 - 19:06
A 1,000-point drop in the Dow Jones Industrial Average (DJIA) may appear like a great deal but, based on historical standards, it is not much. Japan's Nikkei has sold off 14% so far this year, and 4% in a day. The sell-off in equity markets has accelerated. A thousand points off the DJIA would be only 6.5%. And the outside forces that pressure markets up and down are pushing them relentlessly down for the time being.
The DJIA has a tradition of plunging on bad news. It sold off 7.9% on October 15, 2008, a single day during the financial crisis in 2008. More than once during that panic, it dropped more than 7%. Nearly as recently, on October 19, 1987, the DJIA dropped 22.6%. The cause was not extraordinary. The economy was in recession and investors rushed for the exits once it became clear that day's trading would be terrible.