Dow Jones Industrial Average Falls to 6-Year Low

It’s not really the bellwether that it once was, but the Dow Jones Industrial Average – or simply the Dow – fell to a six year low on Thursday, losing 1.2% to close at 7,465.95. The drop came amidst declines in shares of financial services firms and was the lowest close since October 9, 2002, which was when the last bear market that the U.S. faced reached a low point. The drop indicates that investors and traders see no immediate end to the financial turmoil into which most of the country has been thrust and a general lack of enthusiasm with economic initiatives put forth by the Obama administration during the week.

Quincy Krosby, chief investment strategist at The Hartford, noted, "It is definitely, definitely a blow to psychology. There is more pessimism in the market as to when the economy is going to pick up steam." Krosby also went on to say that "The Dow represents, to the average investor, the American Economy. It’s a tenet of the market, selling begets selling. You’re going to see the market on guard."

The Dow was not the only major index to fall on Thursday, as the S&P 500 also fell ½%, to 778.94 and the Nasdaq, which is composed largely of technology companies, fell 1.7%, to 1,442.82. Dan Cook, who is a senior market analyst with IG Markets, indicated that the Dow’s precipitous drop is worrisome because it signals to investors that the bottom could be much further away than initially thought. He noted, "It’s kind of like if we’re walking across a frozen pond. If that ice starts to crack a bit we’re going to be very wary."