Dow slumps triple digits as Treasury yield curve inverts (recession indicator)

MarketWatch.com (by Dow Jones) ^ | 12/27/05 | Tomi Kilgore

[SierraWasp]

Dow slumps triple digits as Treasury yield curve inverts ($INDU, $COMPQ, $SPX, $TNX) by Tomi Kilgore

NEW YORK (MarketWatch) -- U.S. stocks closed sharply and broadly lower, with the Dow industrials suffering its first triple-digit loss in 2 months, as the Treasury yield curve inverted for the first time in five years, sparking fears of a possible recession. The Dow ($INDU) slumped 105 points to an unofficial close of 10,778, its lowest close in 2 weeks and the biggest one-day point loss since Oct. 27. The Nasdaq Composite ($COMPQ) shed 22 points to 2,227 and the S&P 500 ($SPX) slid 12 points to 1,257. The 2-year Treasury note yielded 4.347% while the 10-year Treasury yield ($TNX) fell 0.039 percentage points to yield 4.341%; the only time in the last 30 years that an inverted yield curve wasn't followed by a recession was in 1998, when the curve inverted briefly during the Asian financial crisis. Recession worries overshadowed a sharp drop in natural gas prices amid reports of warmer-than-usual weather, with the front-month futures contract tumbling 10% to a 4-month low of $11.022 per million British thermal units on the New York Mercantile Exchange.

[xcamel]

[Jigsaw John]

Well, my opinion was I have no idea why this happened directly after Christmas, and I stated IMO, this does not look good.

Your opinion was that this is due to liberal investors.

We all see things differently.

[sergeantdave]

"Dow slumps triple digits as Treasury yield curve inverts"

Bring out your dead!

Bring out your dead!

The end is near.

[Moonman62]

I love our President, but his one great strength is also one of his failings -- he seem incapable of firing people or asking/accepting resignations... I would be quite happy if he overcame this early in his administration and had fired Greenspan (whom I loathe).

I agree. Another one of his strengths is he always sticks to his plan. He came to Washington with an economic plan, but he didn't adapt to a historic decline in business spending and corresponding decline in the stock market. He eventually compromised in 2003 with the dividend and capital gains tax cuts.

Greenspan hit his peak in 1994 when he said he would use market indicators to adjust the money supply. That didn't last long and he's believed he's smarter than the markets for several years.

[SierraWasp]

"We all see things differently."

Profoundly true! If it were not so, we would all suffer terminal boredom!!!

[SierraWasp]

How come you didn't hyperlink some midi "derge" music to go with that astute observation?

Tomorrow I'm gonna be dancin a jig as I back up the truck to load up on undervalued stock funds!!!

[SolidSupplySide]

We know what kind of impact that had on the markets here.

Yes we do. The impact on US markets was shallow and very temporary. It was if the markets acted on fear alone instead of any fundamental reason.

[lewislynn]

Meanwhile while everyone wasn't looking at their own house of cards, waiting, hoping?, expecting, to see a "real estate bubble burst", an article in my local paper claims the median price for homes (they're still selling despite what you hear) is more than 27% higher than 1 yr ago.

If the Dow were 27% higher today than 1 yr ago it would be well over 12,000.

[SierraWasp]

Just a tagline correction ping!

[SierraWasp]

Yes, I agree with you! (don't faint) This simply means it's a much better time to buy equities than real estate, although I still not scared to death of R.E. if I were to find the right deal. I sure wouldn't invest in any Volvo's, however!!! (grin)

[sergeantdave]

I had in mind a Russian funeral march. Let me know how it sounds....here goes -

Dum-dumdum....dumdum.

Dum-dumdum....dumdum.

Dumdumdumdum dee dumdumdum!

[LouD]

"Correlation does not mean causation" bump...

[lewislynn]

It was intended as more of a comparison than a recommendation. The (local) 27%+ increase in price is good for the real estate I already own but it doesn't help me any to purchase more right now.

The article you posted today was timely, it made me decide where I'm putting some extra cash.

I will say this, everyone I know who has made it well, has made it with real estate.

BTW, the Volvo wasn't a bad investment if you can call not losing as much value as other vehicles an "investment"..and It's a hell of an SUV too.

[editor-surveyor]

"It would be a great thing if they could just stop raising rates now, and leave things alone and let the economy coast for a few years without screwing around with it."

Is your fairy godmother a union member?

[editor-surveyor]

You're just full of good news, aren't you?

[SierraWasp]

Dats it!!! Good to get you comments cause I've enjoyed everyone of 'em!!!

[Jigsaw John]

Meanwhile while everyone wasn't looking at their own house of cards, waiting, hoping?, expecting, to see a "real estate bubble burst", an article in my local paper claims the median price for homes (they're still selling despite what you hear) is more than 27% higher than 1 yr ago.

I would guess your in CA, as I just read the same.

[SierraWasp]

Yes, I know you love that Volvo SUV almost as much as I love my little Hummer rescue vehicle!!!

By the way... where'd you decide to put that extra cash?

[SierraWasp]

""Correlation does not mean causation" bump..."

I'll buy that!!!

[SierraWasp]

"Is your fairy godmother a union member?"

No, but he might know some members of the Sexual Workers Union in Holland who live out behind the dikes with the fairies... Some of them are real muthas!!!