If the dow moved up or down on a given day, why is this important?

Question

what significance does this have?

Answer 1

In the case of small percentage moves, this is insignificant and can be attributed to random fluctuation.  In the case of very large percentage moves, it's increasingly likely that the market is sending a market signal that reflects a fundamental condition, such as national shock and awe following the 9/11 attacks.

Be very wary of news services that try to associate every day's fluctuations with that day's news.  In the half empty/ half full glass of economics this is usually just self serving behavior by the media.  For example, the market declines one day and the decline is attributed to investor fear that the Fed will raise rates and thereby dampen economic growth.  The next day it rises and the media attributes it to the perception that higher rates will contain inflation and preserve the purchasing power of money.

Answer 2

It impacts investors' perceptions of where the market is headed for the future. Therefore, the more extreme the swings up or down, then the more likely the marginal (top or bottom) investors will move in or out of the market to avoid perceived loss or seize perceived increases in value.  As such, even those who aren't primarily concerned about price movement must then secondarily respond in some fashion to the extent that the more marginal investors are impacting price.  This is not necessarily negative.  If panicked investors are overselling a stock, more insightful investors will take advantage of that swing and buy in. Likewise, when novice investors are buying in "late" in a stock's upswing (overbought the stock), the more experienced traders are selling as - not after - the stock begins to peak, so they can reinvest as the stock goes back down.  

Answer 3

One day is not really significant.  For instance in 1987 when it crashed it was down 23 percent in one day.  The next day it was up 100 points, the biggest  one-day gain in history to that point.  And 18 months later it was back where it started.  Its what happens over time that is important.  Recently its been down and went down to a 20 percent low over a short time into a bear market.