Monday’s Supply Management’s index disappointed investors as it showed that during the month of January, the expansion was much slower than expected; the lowest since May 2012. Following the volatility of the markets during January and the stock market being 2% away from a correction or 10% or more decrease in stocks, it brings forth risk and volatility to the stock market. In addition, people who are continuing to leave emerging markets are fueling a decrease for stocks. Demand decreased during January and thus production slowed more than the usual, essentially slowing the momentum for growth in manufacturing causing a drop of 2% on Monday for the Dow Jones. The Dow Jones finished strong for the week, climbing165.55 points. With Friday’s rally, the Dow Jones broke a three week losing streak but it is down 4.7% for the year. As the year is progressing, many investors feel less certain on how stocks will perform for 2014; however investors are not pulling their money out of the stock market just yet. With the high risk that comes from emerging markets and the low yields from the bond market at the moment, the stock market continues to provide returns for investors at a rocky pace.
Article submitted by: J. Camilo Parra and David Gomez of the Capital Markets Lab (CML). To learn more about the Capital Markets Lab (CML) please visit https://business.fiu.edu/capital-markets-lab/.