At the time of this post on May 19, 2016, the DJIA was 17,376.65 , down 149.97 or .86% from yesterday’s close-which is close to the 17,000 mark I thought it would be in my last post on March 21, 2016. I know, my powers of prediction are incredible- at times, but my reasoning is always spot on.
Today’s free fall appears to be the market’s reaction to the possibility of a rate hike by the Federal Reserve in June 2016. I believe that the Fed will increase interest rates by a quarter point, though, the earnings in the next few quarters will be challenged. The Fed is very tired of the market’s skittishness to the possibility of a rate hike, much like a dog that leaps from the couch and scurries to the front door to bark when someone is within 15 feet of the front door. The market needed to “slow its roll” as the run up to 18,000 was not warranted and realize that a quarter point hike by the Fed would eliminate further action until next year as Q3 and Q4 earnings for 2016 will not foster any warm and fuzzy feelings for another rate hike given these last two quarters will be challenged to meet the growth expected as the top and bottom lines reflect an economy that is challenged.