The past couple of days have been especially hard on market investors. On Wednesday, June 11th alone, the Dow Jones Industrial Average, which averages out 30 of the most influential stocks on the exchange, lost over 100 points, one of the most significant falls this year.
So what happened? Earlier this week we saw four days straight of record trading and gains, increasing the economic outlook substantially. What changed all of that? Let’s take a look!
World Bank Forecast
Based on a few exacerbating factors, the World Bank lowered its projected numbers for the world’s economic outlook this year. One of the most influential factors was an American winter that was one of the worst in recent memory, which caused a shrinkage in the annual growth of the USA economy by around one percent. The other primary deciding factor in this reduction was the ever-present crisis in the Ukraine.
The Defeat of Eric Cantor
The surprising defeat of seven-term Congressman, Eric Cantor, has investors in an uproar, with many speculating that this could bring about the return of gridlock in the nation’s capital. This would primarily come in the form of reduced ability to compromise on matters of importance to the financial community.
Industry giants, such as Ebay, Radio Shack and Tyson Foods all fell, primarily due to valuation concerns. This was fueled by speculation that the recent, incredible rebound of the markets may have overvalued these, and other, company’s worth. As time progresses, these values are projected to even out, which would allow a much more accurate valuation to be assigned.
While the decrease in stock value is alarming, there is no indication that it will signify a full relapse in the economy, or a return to the recession we recently dug ourselves out of. Is this slide something that affects you in a major way? Let us know in the Comments section below!
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