Why does the DOW matter in our economy?
When watching financial news or news in general, anchors or reporters often mention the DOW and its activity, or how an event has affected it. So far, President Trump has been historically vocal about what the state of the DOW is, insisting that the stock market is doing well when in fact it wasn’t. Steven Fisackerly believes that a lot of people think that the DOW represents our economy. Just what exactly is the DOW and why does it matter in our economy?
The DOW is short for the Dow Jones Industrial Average (DJIA) which is an indicator of how the 30 largest companies in the US are faring in today’s economy via daily trading sessions. The stock market provides a measurement in terms of the activity of these companies and their performance. The stock prices are also reflective of a company’s net worth based on how much the prices of their stocks are. For example, a steep decline of Apple Inc. in the stock market would mean that its stocks would have lesser value than what they had before.
Given that the DOW only restricts itself to having the top 30 companies in the country, it would only be a good indicator of industrial health. For local smaller businesses, how the DOW performs doesn’t affect their daily lives that much. Steven Fisackerly states that it would only affect people who have invested in these companies or who are directly incorporated with the company like employees, resellers, and vendors.
Given that several of these companies are open for trading their stocks, they are susceptible to the movement of the global economy, as well as global perception. For example, if the sitting president agitates the global market by proposing an unpopular bill, it could turn off possible global investors and pull the DOW down, according to Steven Fisackerly.
