The Dow Jones Industrial Average was sitting pretty at the end of January. And then it wasn't, as a correction hit. Since then it's gone up and down and up again, and the wild swings don't seem likely to end any time soon. With that in mind, we're keeping a semi-live look on the volatile markets. Here's the latest from Barron's reporters...
3:45 p.m. It might feel like nothing has happened since we last update you on the market, but that would be oh-so wrong. The major indexes staged a mid-day rally, one that saw the Dow Jones Industrial Average cut its loss to about 113 points, and the Nasdaq Composite even turned positive again.
But alas, it wasn't meant to be. The S&P 500 has dropped 0.7% to 2745.98, while the Dow Jones Industrial Average has tumbled 282.72 points, or 1.2%, to 24,724.31. The Nasdaq Composite has fallen 0.3% to 7489.58.
Is this it for the market? Playing the market, as always, means playing the odds, and Phases & Cycles' David Tippin and Ron Meisels contend that the odds remain high that the market continues higher. They write that the market's strength after hitting its correction low suggests that it "will be able to resist any renewed selling pressure that may appear in the next few weeks," and that the market could finally be ready for a sustained push higher in "early spring." The upshot: "The prospects remain strong that the S&P 500 will see new all-time highs," they write.
Even if it doesn't feel that way right now.
12:09 p.m. Did we say 2.82%? Now the 10-year yield is at 2.80%, and apparently freaking out the market, big time. The S&P 500 has fallen 0.7% to 2747.02, while the Dow Jones Industrial Average has tumbled 306.37 points, or 1.2%, to 24,700.66. The Nasdaq Composite has declined 0.5% to 7476.92.
If you're looking for a reason for the drop below 2.82%, Seaport Global's Tom Digaloma has one for you. He notes that the decline occurred when German Chancellor Angela Merkel was quoted as saying that she doesn't think Europe can get an exemption for U.S. tariffs, and that if it can't, it will respond.
And if that wasn't enough good news, today's economic data caused the Atlanta Fed's GDPNow forecast for first quarter GDP to fall to 1.9%. So much for an overheating economy.
11:08 a.m. So the third day isn't a charm. The S&P 500 has declined 0.1% to 2762.25, while the Dow Jones Industrial Average has dropped 114.64 points, or 0.5%, to 24,892.39. The Nasdaq Composite has ticked up 0.1% to 7514.99.
So maybe that benign data--the weaker-than-expected retail sales and a downtick in the producer price index --this morning wasn't so benign after all. It has, after all, caused the 10-year Treasury yield to declined 0.025 percentage point to 2.82%. Now, rather than fear of yields rising too quickly, we have yields falling, which shouldn't be taken as a positive either. Societe Generale's Alain Bokobza notes that 3% might remain out of reach unless there's "a significant shift in growth and/or inflation expectations. "That's because a lot of good news about both economic and earnings growth is priced into the market, which also seems comfortable with where the Federal Reserve is taking interest rates. "A sub 3% 10-year US bond yield is one of our key assumptions for 2018," Bokobza says.
And if the 10-year yield keeps falling, how long until we start worrying about the possibility of a recession ?
6:53 a.m. The market will apparently try to follow that age-old adage: If at first you don't succeed, try try again. S&P 500 futures have advanced 0.3%, while the Dow Jones Industrial Averag e has risen 86 points, or 0.3%. The Nasdaq Composite has gained 0.4%. It's the third time this week that futures have suggested a higher open for the market, but the Dow and the S&P have given back those gains in each of the past two days and finished in the red.
Could we see similar weakness today? Orips Research's Zev Spiro wouldn't be surprised. He noted that "bearish candlestick patterns" have shown up on the charts of the major indexes, which signal resistance near yesterday's highs. He called this a "negative development" that "may lead to weakness in the near term." But if the indexes can close above yesterday's highs--the S&P 500's was at 2,801.90--then the path of least resistance would be higher.
We'll be watching.
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