The Stock Market Dropped Today, Here is Why

Today the Down Jones Closed down a significant 370 points (almost 3%).  The question is why?  The answer, The Institute for Supply Management’s January report on the service sector, which accounts for about two-thirds of the economy, said the service side of the U.S. economy dropped sharply . The index dropped to 44.6 last month from a revised reading of 54.4 in December.  This the lowest number since 2001.

So what the heck is the real meaning of this?  The simple way of putting this is the U.S. economy is in a definite decline on the “service” side of the economy.   This is bad because so much of our economy (66%) is service based.

So what’s next?  It’s possible the services side of the economy could rebound some in February, like the manufacturing side did in January after its’ own slide in December.   The benefit of the Federal Reserve’s two big interest rate cuts in the latter part of January could also help spur the service sector back into growth mode later this year.

The key to understand here is this is another shot across the bow of the coming war that is a imminent recession that sooner of late will happen.  My advice yet again is to make sure you are not fully exposed in stocks right now.  We had a few good years but a slide is coming have a heart to heart with your advisers and put some of your investments into something safer for the next few years.

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