A sigh of relief was breathed by investors on Tuesday, August 09, when the major US indices, DJIA, Nasdaq and S&P 500 had bounced back strong from their Monday losses. But it had to be short-lived! For, on Wednesday morning again, the markets slipped down terribly to give up all that was gained the day before.
The Dow Jones Industrial Average Index fell by 520 odd points to wipe out Tuesday gains which accounted for 430 points on the index. It closed for the day at 10,720 levels which seems to be a scary situation. The tech heavy index Nasdaq had a bad day at the office too. It sunk by 101 points or 4.1 percent to mark the day end at 2,381 levels. Even S&P 500 closed at 1,121, 52 points down from its previous close which is around 5 percent.
Most of the stocks were hit hard by the market action Wednesday and it has brought back fears of a double-dip recession in the coming times. Federal Reserve’s announcement that the interest rates would remain stable and will not be raised until year 2013 has had an impact on the markets.
Investors are losing confidence with each passing moment and the money is moving to safer bets including bonds and commodities like gold. Gold is constantly trading above $1,750 and is outshining the commodity space. Also, the financial uncertainty in France is another factor responsible for impact on global economies. Yesterday’s sell off in the US markets is reasoned to be because of short selling and profit taking by institutions.
If institutional investors have made up their minds to take profits and exit the markets, there lie tough times ahead. The continuation of this profit taking strategy from institutions will only weaken the confidence of retail investors thus bringing more sad news for the US markets.
In Asian trade, Nikkei and Hang Seng were trading down on Wednesday but Europe opened stronger. The FTSE 100 and CAC are in the green territory with gains of more than 1-2 percent each. Also the US stock futures are currently in the green which is yet another plus sign for the markets. Can Europe being positive while US markets open for Thursday trade help in some way? If that does happen, hope remains for better market conditions globally!
