Dow Jones Industrial Average: 20,404.49 (-118.79, -0.58%)
Reflects changes in 30 well-known stocks (e.g. Apple, General Electric, IBM, Exxon Mobil). Daily movements of +/- 100 points are considered to be large.
S&P 500: 2,342.19 (-4.02, -0.17%)
Reflects changes in 500 stocks that includes large companies across all sectors. Because it consists of so many diverse companies, it is considered one of the best representations of how the stock market is doing. Daily movements of +/- 10 points are considered to be large
NASDAQ: 5,849.47 (+13.56, +0.23%)
Reflects changes in an index of more than 3,000 stocks that consists mainly of technology companies. Stocks such as Google, Amazon.com, and Microsoft are traded on the NASDAQ. Daily movements of +/- 30 points are considered to be large.
Oil prices plunged…
Following a surprise increase in reported gasoline inventories (reported every Wednesday), oil prices dropped more than 3% today.
Why do we care? Many energy stocks are publicly traded so when oil prices decline significantly, stocks linked to its price will fall. As an example, the Energy sector ETF was very weak today (ticker: XLE, down 1.47%). On the flip side, lower energy prices are typically good for consumers since this means the cost of oil related products such as gasoline should be lower. While this could show up as positive consumer economic data in the near future, a sharp daily decline in oil prices like the one seen today will have a negative impact on the day’s trading due to the short-term impacts on energy specific stocks.
IBM’s earnings were really bad…
After the closing bell on Tuesday, IBM posted its 20th consecutive quarter of year-over-year revenue declines. The stock ended the day down over 8 points (-4.92%, ticker: IBM).
Why do we care? IBM is a stock contained in the Dow Jones Industrial Average, so its decline today of over 8 points took more than 50 points off the Dow just by itself. Similar to Goldman Sachs yesterday (see the 4/18 Coherent Finance write up), this disappointment in IBM’s quarterly earnings had a very negative impact on the Dow and helped to drag down the overall market today.