Stocks Slammed As Interest Rates Climb; Fed Officials Not Concerned

While the losses on Thursday weren't quite at the disaster level, the declines were significant enough to get people's attention. The Dow lost 200 points, the first time that has occurred since July 11 (-219.21), though it could have been much worse. The 30 blue chips were down more than 350 points early in the afternoon, but some "buy the dip" specialists stepped in to rally stocks into the close.

The NASDAQ fared much worse than its peers, as investors scrambled out of speculative tech stocks, some of which carry significant debt loads. With interest rates rising, debt servicing costs are going to be scrutinized as they can materially contribute to deterioration of bottom lines.

With a decline of 1.81%, the NASDAQ losses were nearly one percent worse than the S&P (-0.82%) and easily outdid the Dow Industrials (-0.75%).

Blaming rising interest rates for all equity woes might be a bit of a stretch, but it is becoming more of a concern as the 10-year note yield kicked higher, reaching 3.20%, an attractive number for those who wish to reduced risk, and apparently, many do.

Other indices slid lower as well, with the Russell 2000 and Dow Transports also in the red. This indicates that investor sentiment may have soured, and this could be serious, coming so close to reporting of third quarter earnings.

An interesting development is the Federal Reserve's ebullient attitude toward the US economy. Chairman Jerome Powell seems to be in the camp that the economy will continue to expand, and he is echoed by other Fed officials, though their giddy projections are in stark contrast to some of the biggest players on Wall Street, including Ray Dalio, Peter Boockvar, and Stanley Druckenmiller, to name just a few. The insightful article is posted at investopedia.com by Matthew Johnston, and can be found here.

That Fed officials are touting the economy is more than a little disconcerting, being that they're cold-hearted bankers and have held interest rates down near zero for a long time. Additionally, they're in the process of unloading trillions in excess securities and they'd like nothing more than to see that proceed smoothly. Surely, they'd like to collect more interest from everybody, so their comments about the strength of the economy are extremely self-serving.

Dow Jones Industrial Average October Scorecard:

Date	Close	Gain/Loss	Cum. G/L
10/1/18	26,651.21	+192.90	+192.90
10/2/18	26,773.94	+122.73	+315.63
10/3/18	26,828.39	+54.45	+370.08
10/4/18	26,627.48	-200.91	+169.17

At the Close, Thursday, October 4, 2018:
Dow Jones Industrial Average: 26,627.48, -200.91 (-0.75%)
NASDAQ: 7,879.51, -145.57 (-1.81%)
S&P 500: 2,901.61, -23.90 (-0.82%)
NYSE Composite: 13,042.29, -76.25 (-0.58%)