Global Rout Continues; All 30 Dow Components Lower; China A 50% Loser Since 2015

Stocks took another beating on Thursday, though not quite as extensively on the tech side as was the case in Wednesday's rout. The Dow Industrials took another two percent hit, sending the 30 blue chips down another 546 points. The combined losses in the six sessions following the all-time high close of 26,828.39 on October 3rd at 1,775.56 or 6.69%, a figure that should not, in and of itself, inspire much fear, though the rapidity, persistency, and consistency of the losses are not exactly inspiring much in the way of investor confidence.

All 30 Dow stocks finished in the red. Spared from most of the carnage was Microsoft, which closed at 105.91, down a mere 0.25 points, or 0.24%. No other Dow issue reported a decline of less than one half percent. Leading the way down was Phizer, with a 3.82% loss. Other stocks finishing down three percent or more included JP Morgan Chase (3.00%), Traveler's (3.01%), Proctor and Gamble (3.16%), McDonald's (3.21%), Cisco Systems (3.31%), Chevron (3.40%) and Exxon Mobil (3.45%). The Dow's gain year-to-date is a now a mere 333 points, or less than two percent. There was nothing even approaching good news as third quarter reporting approaches.

The NASDAQ fared much better than the three percent decline it made on Wednesday, dropping less than 100 points, though that was hardly cause for optimism. Having reached a peak of 8102.04 on October 1, the index has shed some 673 points, putting it close to correction (-10%). NASDAQ shares are down a cumulative 8.3%.

On the S&P 500, the percentage decline was almost identical to that of the Dow, losing 57.31 points, down 2.06 percent. The losing streak of the S&P has now reached six straight days. It also closed at an all-time record of 2947.25 on October 1, but has since fallen 219 points, a 7.4% loss in just eight sessions.

Year-to-date, the S&P is up by only 55 points, a gain of just over two precent.

Stocks were also being sold off in droves on foreign exchanges. In Germany, the DAX continued its descent with a loss of 173.15, another 1.48% drop, sending it further into correction. Joining the DAX in the down 10 percent or more club was Britain's FTSE, losing 138.81 points (-1.94%). France's CAC 40 is teetering on the brink, down more than nine percent off recent highs.

On Pacific Rim exchanges, Japan's NIKKEI was down 3.89%, Hong Kong's Hang Seng lost 3.54%, but both were outdone by China, where the SSE Composite Index closed down 5.22%. China's stock market is the world's basket case, down a full 50% from its all-time high of 5,166.35 in June of 2015, the chart bearing a striking resemblance to the NASDAQ's dotcom bust of 2000. The SSE closed Thursday at 2,583.46.

What comes next for markets is anybody's guess. Analysts and economists range from complacency to panic and everything in between. The losses this week rival those from February of this year, when major US indices touched briefly into correction.

Bonds firmed on the day, with the 10-year note finishing with a yield of 3.13%. Oil was hit hard again, with WTI crude losing nearly three percent, closing just a shade under $71/barrel.

The only bright spots were in precious metals. Gold had its best day in months, gaining $34 to $1,227.70 per troy ounce. Silver followed along dutifully, picking up 28 cents per troy ounce, at $14.61.

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
10/10/18	25,598.74	-831.83	-859.57
10/11/18	25,052.83	-545.91	-1405.48

At the Close, Thursday, October 11, 2018:
Dow Jones Industrial Average: 25,052.83, -545.91 (-2.13%)
NASDAQ: 7,329.06, -92.99 (-1.25%)
S&P 500: 2,728.37, -57.31 (-2.06%)
NYSE Composite: 12,349.53, -272.61 (-2.16%)

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%)

Dow Closes With Losses; Is This 2007 All Over Again?

The Dow spent the day criss-crossing the unchanged line - 20 times to be exact - before finally capitulating late in the day, closing lower for the third time in four days, the losing sessions outweighing the sole winner by a margin of some 398 points.

Among the various reasons for the recent declines are the usual suspects: trade and tariffs, emerging market weakness, soaring bond yields, and widespread political unrest, not only in the United States, but elsewhere in the world, particularly Europe, where nationalism is on the rise in opposition to hard-line European Union bureaucracy and technocrats.

Italy is the most recent focal point, where the latest government consists of parties warring within themselves, with each other, and with the political apparatus that overarches all things European from Brussels. The Italian government, like most modern nations, is saddled with largely unplayable debt, seeking solutions that preclude involvement from either the ECB or the IMF, a task for only the brave or the foolhardy.

As much as can be said for the political turmoil within the Eurozone, it remains cobbled together by an overtaxed citizenry, ripe for revolt from the constraints upon income and general freedom. As was the case with Greece a few years back, the EU intends imposition of austerity upon the Italians and is facing stiff resistance from the general population and government officials alike.

Political sentiment aside, the canary in the US equity coal mine is the downfall of the treasury market, which has seen rising yields almost on a daily basis since the last FOMC meeting concluded September 26, the well-placed fear that the Fed has reached too far in implementing its own brand of monetary austerity by flooding markets with their own overpriced securities. The resultant condition is the most basic of economics: oversupply causes prices to fall, yields to rise.

Adding to investor skittishness are upcoming third quarter corporate reports, which promise to be a bagful of not-well-hidden disappointment, given the strength of the dollar versus other currencies and corporate struggles to balance their domestic books with those outside the US. Any corporation with large exposure to China or other emerging markets is likely to have felt some currency pressure during a third quarter which saw rapid acceleration in the dollar complex. Most corporations are simply not nimble enough to adjust to quick changes in currency valuations, leading to losses on the international side of the ledger book.

Valuations could also matter once again. Since the economy in the US is seen as quite robust and strong at the present, investors may want to question their portfolio allocations. Good things do not last forever, and while the current rally under President Trump has been impressive, it has come at the end of a long, albeit often sluggish, recovery period.






All of this brings up the point of today's headline, the eerie similarity to the market of 2007, which presaged not only a massive recession, but a stock market collapse of mammoth proportions, a real estate bust, and vocal recriminations directed at the banking cartel, which, as we all know, came to naught.

In 2007, the Dow peaked on July 11, closing at 14,000.41, but was promptly beaten down to 12,845.78 at the close on August 16. It bounced all the way back to 14,164.53, on October 16, but was spent. By November 26, the day after Thanksgiving, the industrials closed at 12,743.44 and continued to flounder from there until the final catastrophic month of October 2008.

The chart reads similarly, though more compressed in 2018. The Dow made a fresh all-time high on September 20 (26,656.98) and closed higher the following day. On October 3, a new record close was put in, at 26,828.39, but the index has come off that number by nearly 400 points as of Tuesday's close.

It is surely too soon to call for a trend change, but, if 2018 is anything like 2007, the most recent highs could be all she wrote, the proof not available for maybe another month or two, but the Dow bears watching if it cannot continue the long bull run.

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

At the Close, Tuesday, October 9, 2018:
Dow Jones Industrial Average: 26,430.57, -56.21 (-0.21%)
NASDAQ: 7,738.02, +2.07 (+0.03%)
S&P 500: 2,880.34, -4.09 (-0.14%)
NYSE Composite: 12,960.57, -39.56 (-0.30%)

Stocks Split As Dow, Led By Consumer Stocks, Rallies

Having plunged 224 points just before noon, the Dow Jones Industrials seemed destined for a third consecutive losing session on Monday.

Instead, investors sensed opportunity, buying up shares of mostly consumer stocks. Walgreens (WBA, 74.15, +1.64, +2.26%, Walmart (WMT, 94.69 +1.38, +1.48%), and Coca-Cola (KO, 46.48, 0.60, +1.31%) emerged the big gainers on the day as the Dow marched ahead more than 240 points to close marginally in the green.

Following along were the NASDAQ and S&P 500, though neither of those indices were able to punch above the unchanged line. Particularly hard hit was the tech-laden NASDAQ, which, inducing Monday's losses, had shed nearly five percent of its value top to bottom over the past three trading sessions.

With stocks floating close to all-time highs, the buying stint today seems to be of questionable quality. Globally, markets were stunned to open the week, with European bourses losing more than one percent, the German and Belgian markets dipping further below correction levels. To say the least, afternoon trading in US markets was built on shaky ground.

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

At the Close, Monday, September 8, 2018:
Dow Jones Industrial Average: 26,486.78, +39.73 (+0.15%)
NASDAQ: 7,735.95, -52.50 (-0.67%)
S&P 500: 2,884.43, -1.14 (-0.04%)
NYSE Composite: 13,000.13, +8.19 (+0.06%)

Weekend Wrap: Stocks Whacked At Week's End, NASDAQ Suffering Most; Global Condition Questionable

Back-to-back down sessions left the Dow Jones Industrial Average lower for the week and month, though only by 11 points, the dual declines amounting to a 380-point loss after the Dow had recorded three-straight all-time highs, so a pullback was not only likely, but probably helpful in the long term.

Stocks have been soaring due to strong economic data, but, at some point, valuation becomes an issue, and that point may have been reached this week. By far, the NASDAQ suffered more than the other indices as investors fled speculative positions in favor of more defensive ones, especially as treasury bond prices tumbled, sending yields on the 10-year note to their highest point since 2011.

The 10-year note closed out the week yielding 3.23, while the 30-year bond offered a yield of 3.40. Better yet, spreads widened, as the 2-year bill finished at 2.88, widening the spread on 2s-10s to 35 basis points, allaying some of the fears for an inversion in the curve, a condition that normally precedes a recession.

Friday's September non-farm payroll data from the BLS came in below expectations of 180,000, at 134,000 new jobs, adding to the shifting sentiment late in Wall Street's week. Unemployment ticked lower, however, from 3.9% to 3.7%, keeping the jobs picture still very much a positive one.

Losses on the NASDAQ (-3.21%) were the worst since March. Such a large loss, especially in the leadership group, may cause investors to reconsider their allocations, especially since October is normally a very volatile time. Besides the risk of further declines on valuation, many speculative tech stocks offer no dividends, an important element for stability in any portfolio.

Globally, markets were lower, with Europe suffering steep declines. The stock index of Europe's leading economy, Germany's DAX, is already in correction territory. Tremors from Italy's burgeoning funding crisis have caused concern in European bourses as the runaway Italian government continues to criticize the European Central Bank's (ECB) practices.

While Italy is unlikely to withdraw from the EU, there is mounting pressure on recently-elected leaders for more autonomy, citing the disastrous condition in Greece, following years of bailouts and forced austerity by EU leaders.

Emerging markets, including behemoths China and India, have been suffering from banking and regulatory malaise, and from a growing suspicion that the official data cited by governments is often fudged to appear better than reality.

The dollar eased late in the week against some currencies, a relief to those emerging markets, though not enough to avoid wholesale capitulation of home currencies, especially in Turkey and Argentina, two basket-case economies on the verge of inflationary and solvency collapses.

Those are the leading factors which has prompted investor flight to US equities and bonds, considered a global safety net, though the crowding of those markets has led to what currently is the condition of overvaluation in some sectors.

Gold and silver were bid slightly through the week, though the precious metals still remain close to there-year lows with no bottom having been found.

While general economic news in the US is good and should continue to be so, global conditions are far from rosy, which is leading to some shift in sentiment and flights to safety.

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

At the Close, Friday, October 5, 2018:
Dow Jones Industrial Average: 26,447.05, -180.43 (-0.68%)
NASDAQ: 7,788.45, -91.06 (-1.16%)
S&P 500: 2,885.57, -16.04 (-0.55%)
NYSE Composite: 12,991.95, -50.35 (-0.39%)

For the Week:
Dow: -11.26, (-0.04%)
NASDAQ: -257.91 (-3.21%)
S&P 500: -28.41 (-0.97%)
NYSR Composite: -90.67 (-0.59%)