| What can explain the summer stock market swoon?
by David Skeel Posted 9/18/15, 01:00 am
Aug. 11 wasn’t a day that will go down in infamy, but it sure changed the course of the summer. China surprised investors by devaluing its currency, and the U.S. stock markets haven’t been the same since.
The fact that economic problems in China roiled America’s markets is odder than it may sound. Although Apple or McDonald’s may depend on vast new markets in China, U.S. exports to China are small overall. According to the U.S.-China Business Council, U.S. sales to China totaled $120.8 billion last year—real money in absolute terms, but less than 1 percent of the GDP.
The new normal? The activity in the stock market seems to be returning to normal, though it is something of a new normal. A chart of the Dow Jones Industrial Average over the past few months shows a line gently sloping downward for several months, and then a big plunge in August. After that we saw a few days of peaks and valleys, and the straight line appears to be resuming—though at a level nearly 2,000 points lower.
Buckle up. Unless you’ve been on a desert island, you know last week was rough in the markets. Monday was a fair day, but Tuesday and Wednesday were down days. On Thursday, the Dow fell more than 350 points. And just when you thought that might be the worst of it, it fell another 500 points on Friday. That’s what you call a bad week. The sell-off continued this morning, with the Dow dropping 1,000 points in early trading.
| A lawsuit may harm one company, but the ride-sharing concept isn’t going away
David Skeel | 8/21/15, 01:00 am
If you own a smartphone, you probably know that Uber, like its competitor Lyft, is a ride-hailing company that has upended the taxi industry. Consumers love Uber; interest groups don’t: New York City Mayor Bill de Blasio recently threatened to crack down on Uber, and the French taxi industry protested Uber by shutting down Paris with a massive strike. Uber now faces multiple lawsuits in the United States.
Markets continue downward. The markets dropped all last week. In fact, Friday was the seventh straight day of declines for the Dow, down nearly 1,000 points from its high in mid-May. It’s also down for the year. We’re not officially into correction territory, but we’re getting close.