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Dow Falls Due to Rising Rates


Ever since the 2008 financial crash, the stock markets in the United States have been relatively strong. In this time, people have seen the value of the Dow Jones Industrial Average increase from around 6,000 points to well over 25,000. While there has been a significant amount of prosperity over the past few years, this past week has seen a significant amount of volatility that included one of the worst days in stock market history.

On Wednesday, October 10, the Dow Jones fell by 832 points (https://www.google.com/amp/s/amp.usatoday.com/amp/1593803002). This was a very significant and surprising fall as it occurred just one week after the stock market gauge recorded its highest point ever. At the same time, the NASDAQ market also fell several percent, which was one of the worst days that exchange has ever recorded. This included 5% plus declines for several major companies including Amazon, Facebook, and Alibaba.

At this point, there are several reasons why the stock market has fallen so much over the past week. One of the main reasons why people believe that the stock market has fallen is because of the recent rising interest rates. While the stock market has been very strong for the past few years, part of this has been fueled by the fact that borrowing costs were at an all time low. This made it very affordable for people to buy homes, cars, and take out loans to fuel their growth. Now that rates are increasing, there is concern that it could slow the overall economy.

Another reason why the stock market could be falling because of interest rates is because it provides people with another form of investment. Over the past five years, low interest bonds and savings accounts made almost no sense. However, since these rates are now climbing up of 3%, they could make more sense to people that are considering a low risk investment option.

Many people across the United States and the rest of the world are also nervous about the potential for a trade war between the United States, China, and other major economies across the globe. There has been a significant amount of news about changes in economic policy that would require these countries to post tariffs on imports. This could end up slowing trade relationships with each country, which could change the economy in both areas of the world and slow the overall economic growth.