Between July 2, 2010 and Sept. 19 2014, the Dow Jones Industrial Average rose from 9686 all the way to 17,279, and increase of over 78%. The economic recovery in the U.S., particularly in terms of job growth, has not nearly matched that pace, indicating that the stock market has been over-inflated. The recent drops in the Dow are likely a long overdue correction in the true market value.
Yes, the Dow will continue to drop, because the Dow is a capitalist institution trying to make it work in a socialized country. With more and more regulations, such as health care, companies are trying to do more with fewer resources. As that is not sustainable, the value of the Dow will fall over time.
Upon entering the fourth quarter of 2014 and approaching fiscal year-end, we will see the Dow continue to drop due to a volatile market. The volatility in the market has stemmed from several key factors: nervous investors, falling oil prices reducing the price of imported goods, and slowing global growth. Chances of the Dow rebounding amid the flood of market data, both good and bad, being released each day is not likely.
With all the uncertainty in the world in the Middle East with ISIS and with the Ebola outbreak in Africa I think the Dow will suffer a little bit especially if upcoming holiday sales are a little slumpy like the last few years. We are still on track for a downturn in the near future.
In the short term, there is to much instability at the moment to make the investors feel comfortable with parting with there cash in a more risky way. In the City of London not to be confused with London itself, there seems to be a waiting game to see how things turn out in the middle east where huge amount of oil is held and whether Europe has extra capacity for growth and growing exports. The real concern in the short term is definitely the situation in the middle east and this Ebola outbreak.