The US stock market faced a nightmarish situation in January 2016, leading to poor expectations for the rest of the year. The monthly decline was the lowest since August 2015.
The lows of January
The month ended with Dow Jones going up by 397 points, but it was reported that the market lost 5.5 percent of its total value. The NASDAQ, unfortunately, suffered more damage. It sank 8 percent, which made January 2016 its worst month after May 2010.
The month also saw a massive slowdown in China. Oil prices crashed too. The month turned out to be the worst beginning of any year, when compared with records going back to 1897.
Peter Kenny, a Wall Street veteran, described the situation as “gut-wrenching drama.” He mentioned that the meltdown in China and the plunge in oil prices caused “extreme fear” in investors. The month saw investors offload stocks of all kinds, including their shares in tech companies. Internet streaming media provider Netflix dropped 21 percent in the disastrous month despite having reached a sky-high figure of 134 percent last year.
January 2016, however, did offer the US stock market one silver lining. After the mayhem during the month, stocks jumped back up towards the end. The Dow closed the month on a slightly promising note. The month ended with 1,015 points more than Dow’s lowest point on January 20, which was at 15,451.
The comeback was caused by several factors, including acknowledging that buying beaten-down stocks would be a good idea if the US dodges a recession. Kenny said that January was a “schizophrenic month” for the US.
The stocks in China crashed by 23 percent. It led investors to learn that the country’s volatile stock market may not clearly reflect the nation's economy. The other factor was the dip in crude oil prices. The prices dropped to a 12-year low at US$26 per barrel on January 20th. This was the same day when the stock market crashed. The prices have now climbed up to US$33.50. The increase in crude oil prices has created some amount of promise for the remainder of the year.
Big names lost plenty during this disastrous month. American corporation Caterpillar lost 5 percent while financial giant Goldman Sachs dropped 3.66 percent. Major tech companies are yet to disclose their quarterly results. Companies like Apple, Facebook, Amazon.com, and Microsoft will reveal their results during the first week of February 2016. After the shockwaves January sent through the country, the US stock market is looking forward to a more stable February.