The Slump
On August 24th of 2015 the U.S. stock market, reeling from China’s grim economic outlook, plunged substantially. Sell-offs happened throughout the day with the Dow falling around 1,000 points. European markets also suffered throughout the week. Our world and markets are growing ever more dependent and reactionary to each other. Although the week started out grim, the markets rebounded throughout the week and have held on since.
For the rest of the week the stock market edged back to its former position with The Nasdaq ending 2.6 percent up. This is in stark contrast to the 8.75 percent plunge on Monday the 24th. The blue chip index was at its lowest this week down 6.62 percent and ended up in the positive of 1.11 percent. This makes it the biggest reversal of the index since October 1987. The S&P 500 closed up at .06 percent with help from the energy and healthcare sectors. However, not everything ended in the black this week. The Dow Jones Industrial Average closed down around 12 points. European markets ended mixed this week with some up and some down. London’s FTSE 1000 closed at .5 percent higher, the STOXX 600 closed at .1 percent higher.
Finally, and most surprisingly, Asian markets closed on a positive note with the Shanghai Composite closing around 5 percent higher. This may be due to the People’s Bank of China purchasing more stocks in their latest attempt to prop up their market.
The Cause
This tumultuous week was mainly caused by the Chinese stock market and economy. The U.S. market responded to the decline and the slowing down of the China economy. China has devalued its currency and their stock market has been in a decline for the past week. However, U.S. stocks this week also got some positive news, the U.S. economy is still strong, and economic data shows that it is even stronger than previously thought. This growth has caused a variety of commodities, including oil, to rise as well. Commodities overall gained 3 percent this week. This turmoil is only increased by the looming possibility that the FED may raise interest rates in September.
The Fed
Speculation has abounded for some time now about whether the Fed will raise the interest rate this month. This worry and uncertainty may have lead to the uncertainty and the downturn over the week. Markets do not like uncertainty and the uncertainty of the Fed’s interest rate has added an extra layer of complexity to the market’s forecast.
Cambridge Realty Capital has and will continue to be a market leader in the senior housing industry. We understand the unique challenges of dealing in today’s market and economy. Although the markets are volatile and there is uncertainty throughout, you can be sure that we will continue to grow and be an industry leader. No matter what awaits around the corner we know we will be prepared.
