DENTON (UNT), Texas — The Dow fell more than 500 points by mid-day Wednesday after oil prices dropped below $27 a barrel, and the Dow remains on pace for its worst month since October 2008 in the worst-ever market start to a year.
UNT economist Michael Carroll is available to discuss today’s trading news and both the short- and long-term effects. Reach Carroll at 940-565-4049 (office) or 419-308-9580 (cell), or by email at Michael.Carroll@unt.edu.
Carroll said he expects the U.S. stock market to remain volatile due to unstable oil prices and foreign markets.
“Both of these factors will continue to shape the financial markets in the near term,” he says. “Oil is not likely to reverse its price slide without a decrease in global production, and China’s economic data will continue to be treated with skepticism.”
He says the current financial volatility “is a result of speculation and the timing of negative data releases, rather than a result of weakness in the U.S. economy.”
Relative to oil prices and the industry volatility, Carroll says, “Yes, local oil producing companies will struggle with oil prices that are below their cost of production levels. And, yes companies that are active in China’s economy will need to examine continued investment decisions.”
”The takeaway from this morning’s sell-off is to understand that it is a reaction to the perceptions of financial market participants. It is not an indication of fundamental economic weakness,” he says.