Why the Dow Fell 384 Points Last Week

A look at what caused the index to move.

Mar 15, 2014 at 11:45AM
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Every week the Dow Jones Industrial Average (DJINDICES:^DJI) moves on a number of factors, whether earnings releases, housing or jobs reports, gross domestic product figures, consumer sentiment indexes, or a change in the trade deficit. While earnings reports are the most important for investors, the numerous economic reports published each week can give an investor insight into the health of the economy, which in turn affects the health of the stocks they own.

This past week the blue-chip index lost 384 points, or 2.33%, and now sits at 16,065. So what caused the move?

On Monday, the big news moving the Dow came from the other side of the world, after a Boeing (NYSE:BA) 777 jet owned by Malaysian Airlines went missing on Saturday. Shares of Boeing fell 1.28% on Monday and more than 4% for the week -- and considering Boeing is the fifth heaviest weighted Dow component, the stock can singlehandedly affect the entire price-weighted index. Another story that affected the overall sentiment on the Dow and Wall Street was that China's exports which declined by 18.1% in February. Many investors took the news as a sign that the world's second largest economy was continuing to slow and that other emerging nations may also begin showing signs of weakness. The Dow lost 34 points on Monday. 

In terms of economic news, Tuesday was a rather quiet day, but the Dow still ended the session down 67 points.

On Wednesday, the Dow fell another 11 points, with the only major economic report coming from the Mortgage Bankers Association. Data indicated that homes being purchased with mortgages -- the purchasing index -- fell 1% for the week ending March 7, while refinancing fell 3%. What was more concerning was that on a year-over-year basis, the purchasing index declined 17%. But rather than taking the news as a sign of weakness within the housing industry, some economists argued that more homes are now being purchased by cash buyers not requiring a mortgage. That might a be good thing for the housing industry, but it would be a potential bad sign for the big banks that make a lot of money on mortgages. 

The weekly jobless claims report came out on Thursday. The Labor Department's report of 315,000 claims was lower than economists' expectations of 330,000, and the four-week moving average fell to 330,500 even though the previous week's numbers were revised upward from 323,000 to 324,000. February's retail sales figures also came out on Thursday, and the 0.3% increase edged out economists' predictions of a 0.2% rise. However, January's number was revised downward to a 0.6% decline, and that was enough to dampen investors' mood. For the day, the Dow fell 232 points.  

The index lost another 43 points on Friday, with the preliminary March results from the Thomson Reuters/University of Michigan consumer sentiment index showing a reading of 79.9. Economists were expecting the index to rise from February's reading of 81.6 to 81.8. The final reading for March will come later in the month, but the poor preliminary figure wasn't what investors wanted to see.  

Check back tomorrow to see what economic reports will move the Dow this coming week.

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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