The Dow Jones Industrial Average fell below 11,000 today – the first time it’s dropped to this point in two years, according to the Associated Press.
Major business publications point to worries about mortgage companies Fannie Mae and Freddie Mac. These two companies are government-sponsored but they are also public – their stock is traded on the New York Stock Exchange.
General Electric is the one member of the Dow Jones index that has done well today on positive earnings news.
Other major stock indices have also fallen. Standard and Poor’s S&P 500 is having another down day, and will finish this week down, the sixth straight week for that to happen.
Here’s a reminder of what these indices measure:
Dow Jones Industrial Average tracks the buying and selling of the top 30 companies traded on the New York Stock Exchange. It’s a price-weighted average of those stocks.
The S&P 500 tracks 500 large cap companies which are weighted according to their market value. I personally consider this to better represent the market’s activity than the DJIA because it tracks more companies.
While having these major indices drop is terrible news, especially for people with retirement money in the market, it’s a great time to buy if you have the money. And the markets will rebound at some point. They always do.
July 11, 2008.