It has been a wild and volatile few days of trading on Wall Street to say the least. During Friday’s session, the Dow Jones Industrial Average ended up finishing down 665 points. That was followed up by the single biggest one day point drop in the history of the exchange. The close on Monday saw the Dow Jones down approximately 1175 points! As of the early open today (February 6th, 2018), the market is sloshing back and forth. It has remained down on the day overall, but the amount that it is down has swung violently around.
It is hard to say with absolute certainty where the market is when you are reading this. That is just how violently it has been moving as of late. There is literally the possibility that it could be down hundreds of points or even up on the day. It has been so unpredictable as of late that either one of those outcomes seems equally as likely.
What could be causing all of this turmoil? Well, the answer is not all that clear. There are any number of factors that could be playing a role in this one. Several people are pointing to new guidance from the Federal Reserve that points to the idea of increased inflation in the coming years. However, that alone would not seem to be enough to spark such a massive market selloff so quickly.
Some others have suggested that automatic computer trading helped to escalate the pace of the decline in the market yesterday. That is a more plausible explanation given that the market dropped 800 points in a matter of ten minutes at one point during the trading day. In all likelihood, it is a combination of the two things. There is a lot to be worried about out there, and there are automatic trades that are firing off without a human being having to be involved at the moment of the trade.
Computers trade without emotions, so it is not unusual that sometimes they overcorrect in one direction or another without a care in the world. Human traders might be able to pull themselves back to some extent but computers just continue to trade without hesitation.
At the moment, all that we can do is wait and watch what happens with this seemingly wild market. This might just be the new way that things are done on Wall Street at this point.