Dow plunges 800 points in worst day of 2019

Emily McCormick for Yahoo Finance:

A selloff in U.S. stocks accelerated into Wednesday afternoon after the bond market flashed its brightest warning signal yet presaging a potential recession. When it was all said and done, the three major indices booked their worst session of 2019.

Here were the main moves in the market, as of 4:00 p.m. ET:

• S&P 500: -2.93%, or 85.72 points
• Dow: -3.05%, or 800.49 points
• Nasdaq: -3.02%, or 242.42 points
• 10-year Treasury yield: -9.1 bps to 1.589%

The yield on the 2-year U.S. Treasury note rose above that of the 10-year U.S. Treasury just after 6 a.m. ET Wednesday, marking the first inversion of this closely watched portion of the yield curve in more than a decade. Inversions of the yield curve – or when shorter-term yields rise above longer-term yields – are taken as bearish signals, since they indicate investors have less confidence in the short-term outlook and are instead bidding up Treasurys on the longer end of the curve.

Wednesday afternoon, President Donald Trump weighed in with a Twitter post:

On Wednesday, signs of a slowdown abroad mounted further, with new data showing output in China’s key industrial sector fell to a more than 17-year low, amid an ongoing trade war with the U.S.

MacDailyNews Note: Jonathan Golub, chief U.S. equity strategist at Credit Suisse, discusses the Treasury yield curve, Federal Reserve policy and the U.S. economy. He speaks on Bloomberg Surveillance:

CNBC’s Jim Cramer discusses his take on Wednesday’s market action:

Thoughtful commentary on this issue is welcomed below.

Please keep the discussion civil and on-topic. Off-topic posts and ad hominem attacks will be deleted and those who post such comments will be moderated/blocked. Permanent loss of screen name could also result.

9 Comments

  1. This is a screwed up site.

    You say, “Please keep the discussion civil and on-topic. Off-topic posts and ad hominem attacks will be deleted and those who post such comments will be moderated/blocked. Permanent loss of screen name could also result.”

    Right underneath a foul mouthed politician quote insulting the Fed chairman that the president himself nominated for the post.

    Hypocrisy much?

    1. If by “politician” you are referring to the U.S. President, who is most decidedly not a politician (if anything he is the anti-politician of our times), there is nothing “foul-mouthed” (properly hyphenated) in his tweet.

      As for your other complaint, which part of the difference between an article’s news content and the reader feedback do you not understand?

    2. TDS much? Obviously.

      Let’s face facts, Jerome Powell screwed up. Yes, Trump nominated him, but he’s also been railing on him to ease off on raising rates and then to bring them down – CORRECTLY – for quite some time.

      Trump was and is right. Powell was and is wrong. It’s not too late for the Fed to wake up and fix the curve.

      1. Is the American economy doing great, or does it need to be stimulated by government action artificially bringing down bond rates? You can’t have it both ways.

        This may be good news for Republicans. A bond inversion like this has presaged each of the last seven recessions (with only one false alarm). However, it has been a leading indicator by from 12-24 months. The S&P has risen an average of 22% during those gaps. If so, the recession may hold off until after Election Day 2020, with a false appearance of health when people are voting.

  2. If this keeps up, Trump better hope “Pocahontas” doesn’t win the Democratic nomination. Otherwise he won’t have a prayer on the national stage debating economic policy with Senator Warren in midst of recessionary panic laid at his feet.

  3. This is the cost of having a chaos President. The economy would be still humming along if not for the trade war. We know that free trade works best; not perfect, but if you think the cost of free trade is bad, then you don’t want to see the cost of trade wars and barriers. Think 1930s depression.

    It’s funny that on a day the Dow plunges 800 points, Trump declares that we are winning.

    He lies to us about tariffs; we all know that it is us, the consumer who pays the tariffs. Thus Trump has raised our taxes. This is the Trump Tax.

    As for the Fed, the interest rates are still very low. There’s not much they can do. And it’s disturbing to see Trump criticize the guy he himself picked for the head of the Fed. Trump said he only hired the best people, yet he has constantly criticized his own hires.

    The deficit has exploded under Trump; no surprise for a guy who went bankrupt multiple times. Trump is the big spending socialist; the only thing is that his welfare is for the rich and powerful.

    Bottom line: Trump is a loser who must go. We need to vote this clown out next year before he does even more damage.

    1. Bottom line: wade is a loser who is already gone from anyone’s minds. Unlike Citizen X-crement who claims to have done so much, wade is wading in the shallow end of the gene pool. Eff you, wade.

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