Stocks Extend Losses on Stormy Monday

As severe thunderstorms raged across parts of the Northeast causing flooding, Wall Street had a storm of its own brewing as stocks stumbled, the Dow losing ground for the fourth consecutive day.

What has caused most of the recent turmoil in stocks emanates from half a world away from the US financial center, as Turkey's lira has crashed, panicking banks with investments in the nation of 80 million, disrupting markets globally.

The Dow Industrials' four-day losing streak has ripped 440 points off the index, turning an August gain of 221 points into a 219-point loss for the month.

While the move has not been large by percentage terms, Turkey's problems are far from being resolved. In addition to the currency failure, Turkey's stock market (^XU100) has also fallen sharply (down more than 25% since late January) and US tariffs imposed by President Trump are exacerbating the unruly conditions.

Treasury yields have bounced around, with the 10-year note hitting three percent on August 1, but has backed down 12 basis points, quoted at 2.88% Monday. The 30-year bond peaked at 3.13% on the first of August and has since fallen to 3.05%, leaving the spread between 10s and 30s at 17 basis points, a widening of four bips since August 1.

With the two-year note yield dropping from 2.67 to 2.61 in the month, the yield curve seems to be better behaved than in the early months of 2018. The spread on 2s-30s has remained somewhat steady. The latest quote showed a 44 basis point spread.

The remainder of the week may prove costly to bullish speculation. July was a banner month for stocks, the best since January, but the euphoria has faded.

Dow Jones Industrial Average August Scorecard:

Date	Close	Gain/Loss	Cum. G/L
8/1/18	25,333.82	-81.37	-81.37
8/2/18	25,326.16	-7.66	-89.03
8/3/18	25,462.58	+136.42	+55.05
8/6/18	25,502.18	+39.60	+94.65
8/7/18	25,628.91	+126.73	+221.38
8/8/18	25,583.75	-45.16	+176.22
8/9/18	25,509.23	-74.52	+101.70
8/10/18	25,313.14	-196.09	-94.39
8/13/18	25,187.70	-125.44	-219.83

At the Close, Monday, August 13, 2018:
Dow Jones Industrial Average: 25,187.70, -125.44 (-0.50%)
NASDAQ: 7,819.71, -19.40 (-0.25%)
S&P 500: 2,821.93, -11.35 (-0.40%)
NYSE Composite: 12,763.66, -79.83 (-0.62%)