Up big one day, down a lot the next. What's driving the stock market volatility?

Jim Puzzanghera, Los Angeles Times on

Published in Business News

WASHINGTON -- One day the Dow Jones industrial average drops 500 points, then it shoots up 600 points and a few days later it plummets 800 points -- 799 to be exact Tuesday.

What in the name of Warren Buffett is going on?

Financial markets have been highly volatile the last few weeks, knocked up and down by several key factors beyond the usual day-to-day movements related to specific companies.

What's causing it?

Let's start with trade.

The ongoing trade war between the U.S. and China has weighed heavily on investors. With the two nations slapping tariffs on each other's products, and threatening more, investors have been wary about the effect on companies that rely on exports and imports.

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But weren't stocks just up Monday because of optimism about trade?

Yes, those worries were eased over the weekend when President Trump and Chinese President Xi Jinping emerged from a steak dinner at the Group of 20 economic summit in Argentina to announce a 90-day truce in the escalating trade battle.

Trump added to the exuberance by tweeting late Sunday that China has agreed to eliminate tariffs on U.S. auto imports. The development helped send stocks higher when financial markets opened Monday.

So what happened on Tuesday?


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