It can be scary when stocks decline. And even normal market volatility can be uncomfortable, especially with large day-to-day stock market moves. The market’s increase over time has raised the level of the Dow Jones Industrial Average (Dow), and as a result, 100-point (or even larger) shifts have become more common. That’s because 100 points aren’t what they used to be.
For our example, let’s use the Dow’s milestone of 25,000. At this level, a gain or loss of 100 points would be less than 1% – it’s actually just 0.4%.
Looking back, a day when the Dow moved 100 points was a big gain or loss in the 1970s and 1980s. But more recently, daily Dow moves frequently have been 100 points or more. Of course, daily fluctuations sometimes pile up, and as we’ve seen recently, there’s always the possibility of a market pullback.
|Average Dow Price||% Decline for 100-point Drop|
|*Assumes Dow at 25,000. Source: Bloomberg data, Edward Jones calculations.|
Instead of worrying when the Dow drops 100 points or so, remember that’s just normal volatility. If you’re concerned about bigger declines, review your portfolio with your financial advisor. If necessary, rebalance to the appropriate mix of stocks and bonds, and be prepared to consider adding stock investments at lower prices to take advantage of such market moves.