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Dow has worst drop since February: What happened?

Published on NewsOK Modified: August 1, 2014 at 2:02 am •  Published: August 1, 2014

The Dow Jones industrial average plunged 317 points on Thursday, wiping out its gain for the year. It was the biggest drop since February and gave the index a loss for July after five straight months of gains. Here are some questions and answers about the sell-off and what might come next.

Q: Why did the stock market fall?

A: A number of worries have been building for investors in recent weeks and several of them came together on Thursday. That prompted people to dump stocks, breaking several months of calm in the market. A number of large U.S. companies reported poor quarterly results or forecasts, including Whole Foods Market and Exxon Mobil. Tensions are escalating between Russia and the West, threatening Europe's economy and energy needs, and the Federal Reserve is getting closer to ending its powerful economic stimulus program. Also, the market has gone for an unusually long time without a significant pullback.

Q: How bad was it?

A: The Dow, an index of 30 large U.S. stocks, had its worst day in almost six months. The Standard & Poor's 500, a broader measure of the market and the benchmark for many index funds, lost 2 percent, its worst one-day decline since April. The S&P 500 index is still up 4.5 percent for the year and closed at a record high just one week ago. The Dow is slightly negative for the year.

Q: Does this mean the stock rally is over?

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