Dow erases gains for the year, tumbles more than 600 points as stocks extend October swoon

[Bootney Lee Farnsworth]

'The Dow Jones Industrial Average dropped 608.01 points at 24,583.42 and erased all of its gains for 2018. The S&P 500 dropped 3.1 percent to 2,656.10 and also turned negative for the year. The Nasdaq Composite fell 4.4 percent to 7,108.40— entering correction territory — as Facebook, Amazon, Netflix and Alphabet all traded lower.

"An increasingly murky macro picture is clouding the 2019 earnings outlook leaving investors to largely shrug off a solid start to the third quarter earnings season," said Alec Young, managing director of global markets research at FTSE Russell. "While valuations have certainly come down in recent weeks, at 16 times forward earnings for the Russell 1000 index, they aren't in the bargain basement by any means, especially if earnings growth slows more than expected next year."

Stocks have taken a beating this month. The Dow has dropped 7.1 percent in October, while the S&P 500 has pulled back 8.9 percent. The Nasdaq, meanwhile, has tumbled 11.7 percent.'

Dow erases gains for the year, tumbles more than 600 points as stocks extend October swoon


A week before Halloween - and the DOW is in the red for the year.

Pro investers are cashing in and getting richer.

Nothing to see here.

.

 

[McRocket]

This is not a simple correction, IMO.

This is an unwinding of a HUGE period of central bank intervention that is now (finally) being slowly unwound. The trade silliness that Trump is obsessed with is just making things that much worse.

I am not saying today's carnage will continue unabated.

But the markets cannot keep growing without the Fed pumping them up anymore. All that debt has to work it's way out.

And the faster it happens, the better off America will be - the less cheap money it has to burn off.

Velocity of M2 Money Stock

For those of you who don't know what the above chart means - it shows that American money is not trading hands...at the lowest levels in recorded history.
That means that much of the money being spent is just new, cheap debt. Existing money is not moving much.
If the only way an economy is growing is through the creation of cheap debt...that is obviously bad news for the future as all that debt eventually has to be paid for.

Heh. My compliments. I don't see people talking about the velocity of money very often.

See my OP: The Fed's Bond Bubble Doomsday Machine

Your chart stops three years ago, though.

Here;

The velocity is picking up, and that is probably why the Fed is increasing interest rates.

Thanks....I have been moaning about the money velocity for several years now - few listen. Nice to see someone who gets it as well.

Actually, my chart does go to today (if you look closely). But yours is more detailed/easier to read.

As for the upturn, I think it was because the Fed started to raise rates as opposed to the other way around.

I would like to hear your logic that higher interest rates increased the velocity of money.

The whole point of raising interest rates is to slow it down.

This is not a simple correction, IMO.

This is an unwinding of a HUGE period of central bank intervention that is now (finally) being slowly unwound. The trade silliness that Trump is obsessed with is just making things that much worse.

I am not saying today's carnage will continue unabated.

But the markets cannot keep growing without the Fed pumping them up anymore. All that debt has to work it's way out.

And the faster it happens, the better off America will be - the less cheap money it has to burn off.

Velocity of M2 Money Stock

For those of you who don't know what the above chart means - it shows that American money is not trading hands...at the lowest levels in recorded history.
That means that much of the money being spent is just new, cheap debt. Existing money is not moving much.
If the only way an economy is growing is through the creation of cheap debt...that is obviously bad news for the future as all that debt eventually has to be paid for.

Heh. My compliments. I don't see people talking about the velocity of money very often.

See my OP: The Fed's Bond Bubble Doomsday Machine

Your chart stops three years ago, though.

Here;

The velocity is picking up, and that is probably why the Fed is increasing interest rates.

Thanks....I have been moaning about the money velocity for several years now - few listen. Nice to see someone who gets it as well.

Actually, my chart does go to today (if you look closely). But yours is more detailed/easier to read.

As for the upturn, I think it was because the Fed started to raise rates as opposed to the other way around.

I would like to hear your logic that higher interest rates increased the velocity of money.

The whole point of raising interest rates is to slow it down.

That is when the Fed is trying to slow down the economy. Since 2007 (or even 2001), the Fed has been trying to heat up the economy (through ZIRP and various QE).

As stated in Investopedia:

'Since 2007, however, the velocity of money has fallen dramatically as the Federal Reserve greatly expanded its balance sheet in an effort to combat the global financial crisis and deflationary pressures. As of the first quarter of 2016, M2 velocity was just 1.46x — the lowest reading since it bottomed out at 1.15x during the Great Depression.'

Velocity of Money

Yes, we both agree the velocity slowed after the crash.

Now it is picking up. Correct me if I am wrong, but it sounded like you were attributing the increase in velocity to the Fed increasing interest rates. The cart before the horse, so to speak.

To me, it looks like the Fed is trying to get ahead of the curve and is increasing rates to keep the velocity from increasing too rapidly.

But if you look at the chart, the curve only started to rise after the Fed started to raise rates at 3 month intervals (March 2017) and accelerated their balance sheet 'normalization'.

United States Prime Rate History

 

[dave p]

The Chinese economy has been 'rattled' by the Trump tariffs.

In response, the Chinese have been doing some questionable financial schemes to help prop things up.

As a result, the Chinese markets have been dropping.

The US markets are responding in kind.

The market drop can indirectly be tied to the Trump tariffs.

But, we all know that, "trade wars are good & easy to win."

What a fvcking train wreck The Donald has unleashed.

There is nothing like putting shit dressing on your own sandwich; right Donny?

Anyone that wants to claim this is all because of tarriffs is a moron.

No; it is not all about tariffs & I didn't say it is, did I? No, I did not but then you had to interject your bullshit into the thread in your lame ass attempt at being all bad ass.
Tariffs are part of the equation though.
There are other components; interest rates & 3rd Q results are two current biggies.
But go ahead & keep playing your wanna B bad ass 13 year old self.

Calm down junior.

 

[caddo kid]

The Chinese economy has been 'rattled' by the Trump tariffs.

In response, the Chinese have been doing some questionable financial schemes to help prop things up.

As a result, the Chinese markets have been dropping.

The US markets are responding in kind.

The market drop can indirectly be tied to the Trump tariffs.

But, we all know that, "trade wars are good & easy to win."

What a fvcking train wreck The Donald has unleashed.

There is nothing like putting shit dressing on your own sandwich; right Donny?

Anyone that wants to claim this is all because of tarriffs is a moron.

No; it is not all about tariffs & I didn't say it is, did I? No, I did not but then you had to interject your bullshit into the thread in your lame ass attempt at being all bad ass.
Tariffs are part of the equation though.
There are other components; interest rates & 3rd Q results are two current biggies.
But go ahead & keep playing your wanna B bad ass 13 year old self.

Tarriffs were the only reference you made. You’re a fucking idiot and you have proven it in your posts.

You’re a fucking idiot and you have proven it by continually being a BITCH

 

[dave p]

The Chinese economy has been 'rattled' by the Trump tariffs.

In response, the Chinese have been doing some questionable financial schemes to help prop things up.

As a result, the Chinese markets have been dropping.

The US markets are responding in kind.

The market drop can indirectly be tied to the Trump tariffs.

But, we all know that, "trade wars are good & easy to win."

What a fvcking train wreck The Donald has unleashed.

There is nothing like putting shit dressing on your own sandwich; right Donny?

Anyone that wants to claim this is all because of tarriffs is a moron.

No; it is not all about tariffs & I didn't say it is, did I? No, I did not but then you had to interject your bullshit into the thread in your lame ass attempt at being all bad ass.
Tariffs are part of the equation though.
There are other components; interest rates & 3rd Q results are two current biggies.
But go ahead & keep playing your wanna B bad ass 13 year old self.

Tarriffs were the only reference you made. You’re a fucking idiot and you have proven it in your posts.

You’re a fucking idiot and you have proven it by continually being a BITCH

Bite me junior. You have never offered up anything if substance . You have been the thread clown.

 

[caddo kid]

The Chinese economy has been 'rattled' by the Trump tariffs.

In response, the Chinese have been doing some questionable financial schemes to help prop things up.

As a result, the Chinese markets have been dropping.

The US markets are responding in kind.

The market drop can indirectly be tied to the Trump tariffs.

But, we all know that, "trade wars are good & easy to win."

What a fvcking train wreck The Donald has unleashed.

There is nothing like putting shit dressing on your own sandwich; right Donny?

Anyone that wants to claim this is all because of tarriffs is a moron.

No; it is not all about tariffs & I didn't say it is, did I? No, I did not but then you had to interject your bullshit into the thread in your lame ass attempt at being all bad ass.
Tariffs are part of the equation though.
There are other components; interest rates & 3rd Q results are two current biggies.
But go ahead & keep playing your wanna B bad ass 13 year old self.

Tarriffs were the only reference you made. You’re a fucking idiot and you have proven it in your posts.

You’re a fucking idiot and you have proven it by continually being a BITCH

Bite me junior. You have never offered up anything if substance . You have been the thread clown.

No one here gives a flying fvck what you think, or what manure you have to verbally spread

 

[Mac1958]

So, at what point do you experienced, long term investors start to worry?

As long as they're a long-term investor, never.

And if they're experienced, they know that perfectly healthy corrections can reach 10% to 15%.

This is why the average active investor has averaged only around a 3% return over the last 20 years (DALBAR study) - they lose their shit over volatility and allow their personal prejudices to distort their reason.
.

 

[skews13]

The Dow’s drop was a sharp reversal from its upward momentum after the trading day began with a strong earnings report from aircraft maker Boeing. By day’s end, all of the Dow’s 2018 gains had been wiped out. The average fell 608 points, or 2.4 percent, to close at 24,584.32. The Dow is looking at its worst month in eight years.

Dow plunges more than 600 points in another day of losses, officially wiping out its 2018 gains

 

[Indeependent]

Hint...QQQ Puts.

 

[Leo123]

Buying opportunity?

 

[Indeependent]

Buying opportunity?

And selling...

 

[sartre play]

Getting whip lash.

 

[Meister]

merged

 

[Geaux4it]

Funny how people are bitching about the drop.

Why didn't you get out when the getting was good?

-Geaux

 

[candycorn]

'The Dow Jones Industrial Average dropped 608.01 points at 24,583.42 and erased all of its gains for 2018. The S&P 500 dropped 3.1 percent to 2,656.10 and also turned negative for the year. The Nasdaq Composite fell 4.4 percent to 7,108.40— entering correction territory — as Facebook, Amazon, Netflix and Alphabet all traded lower.

"An increasingly murky macro picture is clouding the 2019 earnings outlook leaving investors to largely shrug off a solid start to the third quarter earnings season," said Alec Young, managing director of global markets research at FTSE Russell. "While valuations have certainly come down in recent weeks, at 16 times forward earnings for the Russell 1000 index, they aren't in the bargain basement by any means, especially if earnings growth slows more than expected next year."

Stocks have taken a beating this month. The Dow has dropped 7.1 percent in October, while the S&P 500 has pulled back 8.9 percent. The Nasdaq, meanwhile, has tumbled 11.7 percent.'

Dow erases gains for the year, tumbles more than 600 points as stocks extend October swoon


A week before Halloween - and the DOW is in the red for the year.

Obama's tenure saw the Dow rise 149% over his 8 years.

 

[candycorn]

Buying opportunity?

You first.

 

[saveliberty]

The Fed is slowing business growth more than anything else. Companies are showing growth, but less than forecast.

Amazon, Intel, Twitter, and 793 other companies report earnings tomorrow. It could be a rough day again.

 

[Meister]

'The Dow Jones Industrial Average dropped 608.01 points at 24,583.42 and erased all of its gains for 2018. The S&P 500 dropped 3.1 percent to 2,656.10 and also turned negative for the year. The Nasdaq Composite fell 4.4 percent to 7,108.40— entering correction territory — as Facebook, Amazon, Netflix and Alphabet all traded lower.

"An increasingly murky macro picture is clouding the 2019 earnings outlook leaving investors to largely shrug off a solid start to the third quarter earnings season," said Alec Young, managing director of global markets research at FTSE Russell. "While valuations have certainly come down in recent weeks, at 16 times forward earnings for the Russell 1000 index, they aren't in the bargain basement by any means, especially if earnings growth slows more than expected next year."

Stocks have taken a beating this month. The Dow has dropped 7.1 percent in October, while the S&P 500 has pulled back 8.9 percent. The Nasdaq, meanwhile, has tumbled 11.7 percent.'

Dow erases gains for the year, tumbles more than 600 points as stocks extend October swoon


A week before Halloween - and the DOW is in the red for the year.

Obama's tenure saw the Dow rise 149% over his 8 years.

With the Feds infusing over 4 trillion dollars into the economy for the same exact period.

 

[Crepitus]

Buying opportunity?

Not yet.

 

[candycorn]

'The Dow Jones Industrial Average dropped 608.01 points at 24,583.42 and erased all of its gains for 2018. The S&P 500 dropped 3.1 percent to 2,656.10 and also turned negative for the year. The Nasdaq Composite fell 4.4 percent to 7,108.40— entering correction territory — as Facebook, Amazon, Netflix and Alphabet all traded lower.

"An increasingly murky macro picture is clouding the 2019 earnings outlook leaving investors to largely shrug off a solid start to the third quarter earnings season," said Alec Young, managing director of global markets research at FTSE Russell. "While valuations have certainly come down in recent weeks, at 16 times forward earnings for the Russell 1000 index, they aren't in the bargain basement by any means, especially if earnings growth slows more than expected next year."

Stocks have taken a beating this month. The Dow has dropped 7.1 percent in October, while the S&P 500 has pulled back 8.9 percent. The Nasdaq, meanwhile, has tumbled 11.7 percent.'

Dow erases gains for the year, tumbles more than 600 points as stocks extend October swoon


A week before Halloween - and the DOW is in the red for the year.

Obama's tenure saw the Dow rise 149% over his 8 years.

With the Feds infusing over 4 trillion dollars into the economy for the same exact period.

How much has been infused under Trump?