Is the growth in the DOW due to economic growth, the loss of value of the United States dollar, or the effect of corporations utilizing profits to purchase back stock, and driving up its stock price?
In the world, the DOW is the most followed stock indexes which contain big companies such as Exxon, Coca-Cola, and Microsoft. investors interpret the positive or negative growth of DOW as the real performance of the economy.
Answer and Explanation:
The Dow is used to track daily price fluctuation of 30 large companies that are publicly traded in America and listed on the New York stock exchange and the NASDAQ. It's viewed as a proxy for the United States economy as well as the general market conditions. The DOW reacts to various world events such as economic news, natural disaster, political unrest, and war. It fluctuates based on economic reports such as interest rates, GDP figures, job creation, unemployment rates, and other economic benchmarks. The growth in the DOW can be attributed to the positive growth of the United States economy. This has been brought about by a potential United States-China deal that has revived confidence in businesses and consumers, rebound in economic data and a lift in investor sentiments contributed to by strong earnings. Due to the strong growth of the economy, corporate earnings have elevated and as a result, the stock prices have increased causing growth in the DOW.
Become a member and unlock all Study Answers
Try it risk-free for 30 daysTry it risk-free
Ask a question
Our experts can answer your tough homework and study questions.Ask a question Ask a question
Learn more about this topic:
from Finance 102: Personal FinanceChapter 9 / Lesson 2