Friends
The correction in stocks that we referred to yesterday was in full view today as headlines about the Chinese playing hardball and the Special Counsel Robert Mueller’s press conference, where he seemed to embolden the Democrats to seek impeachment proceedings, weighed on the market psyche. But, perhaps more than all of that is the continuing decline in interest rates (rally in bonds)that really has the markets in disarray. The yield curve continues to invert with the 10 year bond now sporting a 2.25% yield, not lower than the 2 year yield, but definitely lower than 6 month bill’s yield of 2.37%. The bond market is both signaling a slower economy (recession?) and challenging the Fed to lower rates. The stock market is caught up in between this game of chicken, and suffering the consequences.
As for today, stocks did rally off the lows of the day (Dow down more than 400 points), and by the close the Dow Jones Industrial Average was down 221 points to finish the day at 25,126. The S&P was down 19 points to close at 2,783. Gold was up $3 to trade at $1,280 per ounce, while oil was down $.33 to trade at $58.81 per barrel WTI.
Yes, this is what a correction looks and feels like. What happens with Chinese trade, politics and the bond market will help determine whether this is simply a correction, or does it develop into something more. Today’s close was a little bit encouraging but let’s see if we follow thru tomorrow. Stay tuned.
Have a nice evening everyone.
