Sensitivity of the stock market these days, since the Dow Jones Industrial Average recently moved above 13000, was illustrated when wire and broadcast reports throughout yesterday mentioned stocks slip "on China fears” or “worries over China’s economic outlook,” sending the market tumbling 68.94 points to 13170.19,” observed Grumpy Editor.
So what were those worries over China that sent the Dow lower for the second time in 10 sessions?
The “China fears” stemmed from a comment Monday in far-off Perth, Australia, from Ian Ashby, president of iron ore operations of Melbourne, Australia-based BHP Billiton, Ltd., the world’s largest mining firm (and listed on the New York Stock Exchange). He said his company was seeing signs of "flattening" iron ore demand from China.
But then, Ashby went on to say iron ore demand would ''grow strongly'' in the next decade and consumption would advance more than 3 percent globally over the next eight years.
And what about the softening in China demand?
That would not happen until after 2025, said Ashby.
Yet, what investors heard triggered concern, said news reports, sending the Dow averages lower.
In the past, a drop in the Dow from a series of major gains would be attributed simply to profit taking.