Friends
It was another crazy day of trading, similar to what we saw in February and other recent pullbacks. Stocks dropped 500 Dow points, rallied back to positive territory, then tumbled 700 points, rallied back about 500 points to set up a final swoosh down into the close. Selling begets selling, as support levels continue to be violated and programs kick in. As we discussed back in February, it is stunning to see stocks move hundreds of points in just minutes. And, the volume was huge.
What was more typical today was the rally in bonds as stocks tumbled, as well as a rally in gold. Indeed, the 10 year Treasury note traded down to a yield of 3.14%. So as stocks were sold, treasuries were bought, which is common during violent market selloffs, as you get large asset allocation moves. Ironically today’s CPI report was rather benign. Remember, the hawks continue to worry that the Fed is behind the curve and that rates need to rise even faster. Current inflation numbers haven’t confirmed that- at least not yet.
By the close, the Dow Jones Industrial Average was down 545 points to finish the day at 25,052. The S&P 500 was down 57 points to close at 2,728. Gold was up $33 to trade at $1,227 per ounce, while oil was down $2.41 to trade at $70.76 per barrel WTI.
So, we had a somewhat unnatural vibrant rally in January, followed by a huge dip in February. Then we got a somewhat surprising robust rally in the 3rd quarter, which we are now following up with another dramatic downturn. It appears that the economy and earnings are going to have to prove themselves once again. The Fed raising rates is getting the blame for the downturn, but the underlying fear is that the economy is going to stall and roll over. Let’s see if corporate earnings have a calming effect on the proceedings. Until then, buckle up. It’s going to be a wild ride for a bit.
Have a nice evening everyone.
