Smackdown! Stocks Crushed; Dow Loses 859 points, NASDAQ Drops 315

Stocks were battered on Wednesday as investors fled stocks in droves, sending the Dow to its worst loss in eight months and extending the S&P 500's losing streak to five straight days.

The Dow suffered its biggest point decline since February 8 (-1,032.89). The NASDAQ's 315-point loss was the largest since the Brexit vote in England on June 23, 2016. Global markets responded the following day with huge losses, the NASDAQ dropping 202 points. Wednesday's decline on the NASDAQ was the third-largest point drop, the 4.08% loss ranks 13th all-time.

Wednesday's sudden collapse was not completely unpredictable. It came exactly two weeks after the Federal Reserve hiked the federal funds rate for the eighth consecutive time, when it's FOMC meeting concluded on September 26. Since then, stocks initially gained, with the Dow making successive all-time highs on October 2nd and 3rd. On the 4th and 5th, however, the direction reversed, with the Industrial Average losing 380 points over those two sessions.

With Wednesday's losses, the Dow has shed 1230 points and futures on Thursday are pointing to more declines.

Markets around the world have been trending lower in recent weeks, with some already in correction territory, most notably, the German DAX, Argentina's MERVAL and the KOSPI of South Korea. England's FTSE has been suffering losses of late and is more than nine percent off recent highs.

Tuesday's post here at Money Daily referenced a market action in 2007 as a comparison to the current condition, noting that in the year preceding the Great Financial Crisis of 2008, the Dow made new highs in quick succession before taking a plunge that lasted a year-and-a-half, finally reversing course in March 2009. A similar set-up occurred recently on the Dow, though the new highs were more compressed.

Large one-day declines are often event-driven. This shellacking can be tied most closely to the September interest rate hikes. With the 10-year note yielding 3.23%, there are few stocks offering that percentage level in dividends, thus, investors seeking to ameliorate risk are selling stocks and buying bonds, which are not subject to the kinds of wild price swings typical in stocks.

When markets open in the US, investors will see that the rout has spread globally. Japan's NIKKEI was down nearly four percent on Thursday. Hong Kong's Hang Seng was down 3.5% and China stocks ripped more than five percent lower.

With closing prices on Wednesday, the Dow Jones Industrial Average has wiped out most of the year's gains. The Dow is up just over 800 points on the year, a gain of less than four percent.

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
10/5/18	26,447.05	-180.43	-11.26
10/8/18	26,486.78	+39.73	+28.47
10/9/18	26,430.57	-56.21	-27.74
10/9/18	25,598.74	-831.83	-859.57

At the Close, Wednesday, October 10, 2018:
Dow Jones Industrial Average: 25,598.74, -831.83 (-3.15%)
NASDAQ: 7,422.05, -315.97 (-4.08%)
S&P 500: 2,785.68, -94.66 (-3.29%)
NYSE Composite: 12,622.13, -338.32 (-2.61%)

Apple Leads Dow, Stocks Lower On Valuation, Dividend Yield Concerns

It's not like Apple (AAPL) isn't a rock-solid stock. The Cupertino, California-based company which has given the world smartphones, smart watches and really zippy computers isn't the world's largest company by market cap for nothing.

The issue is more one of value over speculation. Apple is fully-capitalized, has doubled in price in less than two years, but the kicker might be the dividend of 2.92 is less than one-and-a-half percent (1.30%), while the 10-year treasury note is currently yielding three percent and probably is going to be higher in coming months.

Those numbers have to give serious investors pause to reflect on whether the tech giant - a mature company, not an instant start-up by any means - can continue to provide appreciation value in excess to their dividend. T-bills offer yield with nearly zero risk. All stocks carry risk to the downside, and Apple may have peaked a few weeks ago when it hit an all-time high of 228.35 at the September 4 closing bell.

Investing isn't a game of chasing winners, it's a matter of timing, though most advisors will deny the thought of market-timing. Proper discipline would have one buying Apple when it looks like it's cheap. With a P/E of just under 20, it's close to being expensive, so some players are obviously taking chips off the table while the gains are fresh and probably taxed at the long-term capital rate. It would make sense to do so. There are other stocks which may perform better in the near future and the allure of risk-free money at three percent is strong.

Whatever the reason, Apple has been leveling off, but the selling got serious on Monday, with volume above 36 million shares, about 10 million higher than average. The stock closed down 5.96 points (-2.66%), leading all Dow components as the Dow and NASDAQ suffered outsized losses, the NASDAQ especially, down nearly 1.5%.

Google (GOOG) also took a pretty big hit on Monday, losing 16.48 (1.41%), as did tech darling, Netflix (NFLX), which was broadly sold, -14.21 (3.90%), to 350.35.

The Dow Jones Industrial Average saw an even split with 15 gainers to 15 losers, but of the six stocks that trade for more than 200 per share, five of them declined, led by Apple. The others were Boeing (BA), UnitedHealth (UNH), Goldman Sachs (GS) and Home Depot (HD). The sole 200+ share price winner was 3M (MMM), which finished at 209.53, up 1.65 points (+0.79%).

Markets overall took a bit of a beating on Monday, though it wasn't enough for anybody to start yelling 'fire' on Wall Street. That may come when the Fed meets next week (September 24-25) and announces the third rate hike of 2018. That may prove to be more this market can bear.

Dow Jones Industrial Average September Scorecard:

Date	Close	Gain/Loss	Cum. G/L
9/4/18	25,952.48	-12.34	-12.34
9/5/18	25,974.99	+22.51	+10.17
9/6/18	25,995.87	+20.88	+31.05
9/7/18	25,916.54	-79.33	-48.28
9/10/18	25,857.07	-59.47	-107.75
9/11/18	25,971.06	+113.99	+6.24
9/12/18	25,998.92	+27.86	+34.10
9/13/18	26,145.99	+147.07	+181.17
9/14/18	26,154.67	+8.68	+189.85
9/17/18	26,062.12	-92.55	+97.30

At the Close, Monday, September 17, 2018:
Dow Jones Industrial Average: 26,062.12, -92.55 (-0.35%)
NASDAQ: 7,895.79, -114.25 (-1.43%)
S&P 500: 2,888.80, -16.18 (-0.56%)
NYSE Composite: 13,031.91, -18.61 (-0.14%)