I was watching on the news this afternoon and it showed that the Nasdaq was down about 250 points at the time of the news airing. What do you make of the stiff nose dive with this stock? This could equate to a lot of money if you had multiple shares. Is there a specific reason why this stock went down so much today?
That's called a buying opportunity! Ahem, Nasdaq is a stock market not a stock, that # you see is just an index of some of the popular listings on it's exchange. It went down because a number of it's stocks went down.
NASDAQ -- http://www.nasdaq.com -- is an exchange, not a stock. Exchanges around the world are dealing the Chinese yuan devaluation, The US market Indicies were down by ~3% today, nothing serious. In my opinion, these declines and dips just portend opportunities to create a shopping list and/or go shopping. Due diligence still applies.
This still raises an interesting question I would like to stay on for a little bit: why yesterday, the NASDAQ exchange lose so many points? NASDAQ is mainly technology based, so, maybe they finally pay what they did: counting too much in China for low prices in manufacturing products. However, this, as a lonely cause, seems not enough to me. I think the whole environment of fear starting in financial markets is more substantial than the part of manufacturing itself, meanwhile these companies seems more concerned than, let's say, a food company, because usually in the food market you don't take much food from countries too much far from you, because the quality goes down and the transportation becomes more challenging. I don't intend to mean in US there's only US food, but it is less concerned by this China affair than technology is.
Stocks within the NASDAQ index are generally more volatile on the whole. Many younger and smaller tech and biotechs, etc. It's almost always up more or down more than the Dow and S&P. And the NASDAQ exchange in and of itself is more prone to technical glitches and other problems than the other major exchanges as well.
Essentially, the index is more sensitive to risk than, say, the S&P 500 and Dow Industrial because companies with a growth-bias have tended to list there. So technology and biotech stocks, for example, are very prominent in this space. Given what's been going on in China and the growth scare associated with it, it's no surprise really that the Nasdaq has felt a lot of pain. It may well be a buying opportunity in the QQQ (its ETF), though those that watched the index fall from its peak in 2000 will be aware just how many years it took to return back to those levels again (about 15, I think). Let the buyers beware.
There is a problem with what you said, and that is tech companies using China for cheap labor and that labor getting more expensive and volatile. The bigger problem, and this goes beyond tech companies is US companies that use china suppliers. Many of the bigger companies in China are nothing more than sweatshops for companies like McDonalds and Apple and stuff like that. They are Chinese companies that supply mainly to just one US company. Many of them got caught up in the irrational exuberance last year in China, and are now crashing, which is causing distress within those companies, which threatens the supply chain for many US companies. I an independent company from China that is a sole supplier for a certain part for the latest ****** goes belly up, or the CEO jumps out a windo because he lost 90% of his fortune, how will that impact Apple´s ability to keep delivering product to their addicts. A big part of the drop in certain companies is just that it is unknown how much of their supply chain might be impacted if some of these companies do go out of business.
US companies have been doing this for a few decades in China. Instead of opening factories themselves, they create independent companies that are registered in China. This gives them a lot of tax benefits and also gives them a layer of insulation in legal and PR messes. When a supplier of McDonald´s products has a sanitation issue, McDonalds can do a little PR work and separate themselves from the issue, even though pretty much the supply company is basically nothing more than a shell company for McDonalds.
I'd still wait a bit before rushing to buy the so called buying opportunities. 3-5% can be recovered in a single lucky day or in a couple of days at most. I'd make a wish list and follow closely the markets in the following days. There are a lot of problems going on world wide and they will definitely have their impact upon the markets. In other words, I expect for the markets to drop even lower.
NASDAQ does and as always been more volatile for some reason and while it reflects the fluctuations of the other markets, that also means the rise and fall if it's own points can higher or lower than the rest.