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Why the Stock Market Is Currently on Fire

Say Contributor

The markets had a no good, very bad day yesterday. So, what exactly happened? I’m Goin’ Down All three of the big dogs of the Street suffered losses. The Dow Jones Industrial Average fell 2.9%, it's biggest one-day drop of the year, while the S&P 500 dropped 3% and Nasdaq fell 3.5%. They are all now basically were they were last year, and Facebook, Amazon, Apple and Google's parent company Alphabet each fell more than 3%. Strange Currencies So, literally everyone (or at least everyone who pays attention and knows what they are talking about) has been worried about President Trump’s ongoing tariff war with China. So basically, tariffs are a tax that the federal government levies against imports. Trump has been using tariffs against China to make American products cheaper and Chinese products more expensive, and Trump recently said he’ll bump those tariffs up to 10% by September, or about $300 billion worth of consumer goods. In response, China has actually lowered the value of their own currency, and stopped purchasing American farm goods. This was enough to basically negate the impact of Trump’s tariffs, and also rattle the markets (which hate instability) into their sudden drop. This was also enough to get China formally, if meaninglessly, labeled a “currency manipulator.” What’s Next? Well, the markets recovered a bit today, as the markets hope this will all blow over, even as many investors are playing it safe by sticking with government-backed bonds. China officially withdrawing from agriculture is expected to hurt the Midwest, which has already hurting from the tariff. Trump isn’t going to be back off from tariffs anytime soon, even if many analysts think Trump pushing sanctions even further might end up causing a recession. -Michael Tedder Photo by Adobe