Dow Jones Industrial Average Plunges Another 500 Points at Open on Tuesday

Photo by Wes Parnell

Photo by Wes Parnell

The Dow Jones Industrial Average plummeted yesterday, setting a new record for the single largest intraday drop in Stock Exchange history. The crash occurred around 2 p.m., falling 1,597 points before closing out at a loss of 1,175.73 points. It dropped another 500 points Tuesday morning at open. Outside the Stock Exchange it was business as usual, no panic, no drama…. yet.

While the 4.6% drop is the largest decline since August 2011, investors are holding off before taking drastic measures. According to Cheddar correspondent, Stephen Jenkins, the market floor was surprisingly calm given the circumstances, investors were willing to wait this one out.

Despite the drastic drop, Tom Farley, NYSE President, is confident in the market, saying the decline was due to a sporadic increase in selling, not a fundamental problem with the market.

While a number of factors could have played into the crash, investors are blaming the Fed, not the market itself. Following a 2.9% wage increase for the month of December, The Federal Reserve Board met last week to discuss raising interest rates in light of what appears to be a potential rise in inflation.

All of this comes just a week after President Trump’s State of the Union where he pinned his name to the economy, boasting of stable growth and confident investors. The White House issued a statement saying, “We're always concerned when the market loses any value, but we're also confident in the economy's fundamentals,” referencing recent wage growth and low unemployment.

Despite the momentary confidence, the waters ahead are not clear. Since 09’ the Fed has kept interest rates low with little signs of a corresponding inflation. On the surface, the markets recent growth points toward an improving economy, but as the 70’s demonstrated, low interest rates paired with increasing wages and low unemployment are clear signs of inflation to come.