RESET: Dow Begins Bouncing Back from Historic 1,175 Point ‘Speed Bump’

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The Dow Jones industrial average opened another 500 points lower Tuesday morning but then quickly bounced back, erasing that additional 500 point loss and climbing into positive terroritory at the start of the day.

That volatility is expected to continue after Tuesday’s initial 500 point drop combined with Monday’s dramatic 1,175 point sell-off for a significant correction since the Dow reached an all-time high on January 26.

Overnight, stock markets around the world took a beating after the Dow’s smooth ride above 25,000 ran into a brick wall Monday, even though it was a pullback analysts had warned was long overdue. After the biggest point plunge in US history, some were tempted to think the sky might be falling, but most experts disagree.

Fears of higher interest rates escalated into a rapid selling frenzy Monday – some of it computer-generated – that wiped out the market’s gains for the year. At one point, the Dow dropped 1,000 points in less than an hour, and it ended with its worst day in more than six years.

READ: ‘Stock Trading Can Be Pretty Emotional’: Understanding the Wall Street Decline When Things Were Going Good

James McBride of the McBride Group said, “The stock market has gone too far, too fast. It’s just appropriate to hit the reset button.”

Before Monday, the S&P 500 index had gone a historic period of time –  about 400 trading days – without a correction of even five percent.

Market professionals warn that the the sell-off could continue for a bit. But few see a recession on the horizon, and they expect the strengthening global economy and healthy corporate earnings to eventually help stock prices recover.

The White House said “long-term economic fundamentals…remain exceptionally strong.”

Vice President Mike Pence said, “Today’s sell-off represents the ebb and flow of markets.”

Greg McBride of Bankrate.com said, “When the market pulls back as sharply as we’ve seen in the last few days, there’s a tendency to go, ‘Oh no what’s wrong?’ There’s nothing wrong. What you’re seeing is just some profit-taking because of the fact that interest rates are going up.”

President Trump was in Ohio Monday praising his recently-passed tax overhaul law, saying his tax cuts are at the center of the improving economy.  

“We’ve already created about 2.6 million jobs since the election including 200,000 new jobs in manufacturing,” Trump said.

Some in the news media were busy poking at the president over Monday’s correction, saying Donald Trump took credit for rising stocks, he should take responsibility for a falling market, but many experts think this sell-off is just a speed bump on the way to even higher prices down the road.

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