Current Market Trends in the DowJones and Nasdaq
Recent market trends have led to sharp increases in volatility which has led the VIX, the ETF that tracks volatility, to shoot ever higher. Both the DowJones and Nasdaq have been spiking upwards or downwards, in conjunction with varying news reports mostly regarding the European bond crisis. As these peaks and troughs become more dense in trend points, a breakout either upwards or downwards is increasingly likely. Overall both the DowJones and Nasdaq have been trending downwards. As such, it is likely that the DowJones and Nasdaq will continue to fall, possibly very quickly.
As concerns continue to arise regarding the viability of the European Union (EU), markets around the world have become increasingly unstable. Economists believe that a recession in Europe is like which might lead to shockwaves throughout the world markets. This recession appears to be stemming from valuations of bonds held on various governments throughout Europe. As fears are arising that bondholders will have to take a haircut on their bonds to protect certain nations, which have been dubbed PIGS (Portugal, Italy, Greece, and Spain), the institutions who own these bonds may have sharp contractions in their business. This may lead to these European banks declaring bankruptcy, which may set off a worldwide recession or depression. Even if this drastic step is not taken, budget cuts by various municipalities may lead to recessionary pressures.
Both the DowJones and Nasdaq, although the represent United States based companies, have companies that have large international components in their business. As such, they are likely to suffer as Europe and China suffer. China sells a significant portion of their goods to Europe, similar to their relationship with the United States. However, currency fluctuations, and possible inflationary pressures, have increasingly led to stock market ralities, as the dollars the stocks are in decline in value, the stocks should surge.
Filed in: Business news