DOW Jones slipped is a precursor to the onset of global economic reality.

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Dow Jones

Tuesday is when the US Stock market was finally feeling the heat of the capsizing global economy. The DOW Jones index fell by a huge 150 points approximately which is due to Apple’s (AAPL) declaration of not meeting their quarterly target due to the coronavirus impact in China and its entire demand-supply chain. While Wall Street still seems optimistic that the US stock market is shielded from the effects of coronavirus in China, the reality doesn’t seem a lot promising. The market prospects do look grim in the coming days because the impact of the virus is spreading like a wildfire and sooner or later the bubble of the US stock market is about to pop.

Amidst all other major indices in the US stock market, the DOW Jones Industrial Average was undoubtedly the worst performer for the day on Tuesday. While the index rallied off its session lows just before the closing bell, it remained a huge 149.13 points or 0.51% low at 29,248.95 points. On the other hand, the S&P 500 fell by 0.21% while the best of all was Nasdaq for the day. The huge 7% rally in TESLA stock was the major reason why the tech-heavy index slowly crept into positive territory for the day.

There was a visible risk-off note in the commodity sector as the price of gold had a rally of around 1% while the crude oil prices dipped to a certain extent after it recovered earlier in the day.

It is a fact that the major economies of the globe will be affected by the wave of coronavirus in China. The call from Apple caught the DOW off guard and hence such a drop was recorded yesterday.

Germany and Japan, two of the world’s significant economic powers have already dipped in their GDP before the impact of coronavirus and now China too is facing a major period of crisis. The only reason why the US stock market is still performing to a certain extent is the fact that only 0.5% of US’s export demand is from China and nothing else. If we compare this to 20% of Japan and 3% of Germany’s entire GDP that comes from China, the reasons for their steep fall is quite evident.

This doesn’t mean that the US market is stable and can deal with the coronavirus slowdown. Sooner or later, the impact will start showing its colors just like it did yesterday on the DOW Jones index.