Springtime for Social Scientists, Winter for Markets and Exporters

I’ve got new event study examples for my finance course! Trade policy measures that are evaluated to hurt profitability of major US listed firms have definitive effects on the Dow Jones index.

Figure 1: Dow Jones Industrial Average index. Red bold lines at announcement of impending Section 232 national security based trade restrictions on steel, and Section 301 trade sanctions aimed at China. Source: TradingEconomics.

Not a completely clean event study, since FOMC decision was made yesterday, and there was news about Facebook earlier in the week. However, the news from those events should have been largely imputed by this morning’s open. Moreover, news about technology stocks should have been diffused in the broader indices, yet the SP500 was also down 2.52% (vs. 2.93% for DJIA).

4 thoughts on “Springtime for Social Scientists, Winter for Markets and Exporters

  1. pgl

    Boeing fell and by a lot more than 2.5%. Aren’t they an exporter? Caterpillar also fell a lot.

  2. Moses Herzog

    I’ve never been a fan of the Dow Jones, and never understood why it’s still the preferred index of TV anchor peabrains. It’s bad enough I have to look at Sow Herera on the business news, (word to the wise, if you’re a food glutton avoid buffet restaurants) but they quote those 30 stocks like we are still living in 1986. Whenever they quote the Dow Jones, I keep waiting for the weatherman to pop out from the side of the TV screen and show me his glass barometer with the drip cup and say “Look folks, it’s going to rain in a few minutes!!!” The only world where a Dow Jones should mean anything is in a country where oligopolies are encouraged by a lack of regulations and a lack of anti-trust enforcement. Draw your own conclusions.

Comments are closed.