What the Dow Jones Today Means to Your Money
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This story originally appeared on nikportal
The market can seem like a mysterious place at times. Even seasoned investors can be unclear about how their investments are performing and what this all means. The Dow Jones today is the leading indicator of the stock market. That’s because it represents the 30 largest companies based in the United States. Each of these companies are big enough that their individual performance is reflected throughout the market. The DJIA is one of the most important benchmarks for investors, financial advisors, and traders because it’s used to set stock market prices and to track market performance. Therefore, understanding what it means for your money can help you stay on track and make the best financial decisions. In this article, we’ll discuss what the DJIA is, what it represents, and how it can help you achieve your financial goals.
The year 2022 is shaping up to be a major turning point for the stock market and the U.S. economy as a whole. That’s because the Federal Reserve is expected to begin raising interest rates around the end of this year. That means the cost of borrowing money to finance businesses and projects is going to go up. In other words, the dollar is going to become worth more in other currencies and the cost of financing a business is going to go up. That means companies will have to raise the amount of money they need to finance their projects or operations. As a result, the best stocks to buy now are those that are less volatile and offer a dividend.
Let’s take a look at some key factors that could influence the stock market in 2022.
Trade Wars and Escalating Tariffs
The year started off with the U.S. and China trading threats of a trade war. The Trump administration announced new tariffs on $200 billion worth of Chinese imports. China responded with tariffs of its own on U.S. imports.
These threats are a direct result of rising tensions between the two superpowers over accusations that China is using predatory tactics to try to dominate the global trade market.
This trade war could have a significant impact on the stock market. If the U.S. retaliates against China with higher tariffs of its own, it could come close to crippling the Chinese economy. If that happens, there will be a global economic slowdown and a pullback in the Chinese stock market.
The Dow Jones Decrease by 5%
The stock market has had a tremendous run over the past few years. The Dow Jones is currently sitting at an all-time high and is expected to decrease by 5% by the end of 2022. The main reason for this is the expected end of the bull market in the stock market. To put it mildly, the bull market has been amazing. The Dow Jones has gained a staggering 3,300 points in the past year and is up by more than 10% since the beginning of the year.
The only problem with this bull run is that it could be the beginning of a more difficult period in the stock market. The Federal Reserve is expected to start raising interest rates and the dollar is expected to begin weakening. When that happens, more and more companies will have to borrow money in order to fuel their growth. Since the cost of borrowing money is going to go up, it’s only a matter of time before some companies are forced to go through a correction. This could lead to a 5% decline in the Dow Jones by the end of 2022.
Bottom line
Unless you have been planning to enter the stock market at some point in the next year, you may want to hold off. That said, the Federal Reserve is expected to raise interest rates around the end of the year. If that happens, it could be a sign of a slowdown in the economy and a pullback in the stock market.
At the same time, the trade war between the United States and China will likely escalate and could have a significant impact on the stock market. The only way to know for sure is to stay informed and pay close attention to what is happening in the market. The Dow Jones today trades at $34,548.
