Wall Street's Monday Blood-Letting Leads to Global Calamity in Equities

US equity markets were roiled Monday as the dollar jumped and bonds sold off, pushing yields higher, especially on the short end of the curve.

The two-year treasury finished the day at 2.09%, the five at 2.47%, and the benchmark ten-year note briefly touched 2.70% before dipping back to 2.68%. For perspective, consider that the five-year treasury was yielding 2.19% and the ten-year, 2.39, just a month ago. Those are significant moves and, apparently, the stock market has now taken notice as fixed investments begin offering yields competitive with stock dividends, at least.

For more perspective, the S&P and Dow averages suffered their worst one-day drops since early September. The percentage was just two-thirds of a percent on both indices. That shows just how decisive the rally since the election of Donald J. Trump as president has been. There has not been on single-day one percent decline on either in well over a year.

If a sea change in sentiment is occurring, Tuesday's trade could be a determinant day. Futures are pointing well lower and the VIX is cresting over 14 in the US, while global markets are a sea of red.

Japan's NIKKEI was down nearly 1.5%. The Hang Song was off over one percent. European bourses are uniformly lower at their midday.

As the nation prepares for President Trump's first State of the Union speech Tuesday night, more focus could be on internal DC politics, especially the readying for release of the troubling, explosive memo penned by the House Intelligence committee.

On Monday, the Intel committee voted along party lines to declassify the four-page missive. The president has five days to release the memo or keep it classified. Opinion and timing see Thursday as the likely eventual release.

With the FOMC set to keep rates unchanged on Wednesday (the meeting opens Tuesday), that may be the only thing that doesn't change this week.

At the Close, Monday, January 29, 2018:
Dow: 26,439.48, -177.23 (-0.67%)
NASDAQ: 7,466.51, -39.27 (-0.52%)
S&P 500: 2,853.53, -19.34 (-0.67%)
NYSE Composite: 13,524.65, -112.37 (-0.82%)