Posted on 12/27/2005 1:36:38 PM PST by 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.
(Excerpt) Read more at bigcharts.marketwatch.com ...
This bull could be wrong, but I'm loving the dropping energy prices. Yes, the bond market is a bit disconcerting...
It might indicate that investors expect a recession, because interest rates typically go down in a recession. But all it really indicates is that investors think interest rates will be lower in the future. It does not suggest WHY they think that. And there are lots of reasons why interest rates can go down besides a recession.
I'd dump the homebuilders, the REIT's, and energy. Tech looks good to me for the first time in 5 years, and then there is also always health care. It's probably time, or past time, for sector rotation.
Then, if your assertion is correct, what in the heck is wrong with these (bleepin) financial newswriters that they missed a biggie like that??? Splain that to me, will ya?
Also, I didn't see any reference to the 2% rule someone posted upstream on this thread.
You're right. Greenspan thinks he knows better than the markets. But most people have been brainwashed to think that the private sector causes recessions. You know, when it produces too much, hires too many people, and gives too many raises. All horrible things according to Greenspan. And it is called a business cycle, not a Federal Reserve cycle.
"Over 800,000 real estate related jobs are at risk; if they are lost when the real estate bubble collapses, watch out."
Well, there's always section eight housing.
WOW! And right after Christmas??
GWB made Greenspan's blunder far worse. The first thing he should have done was hold Greenspan accountable and asked for his resignation. Greenspan even offered it in his own obtuse way.
They'd better. Or they can kiss any recovery good bye.
Most of the people that got their RE license in the past two years never had any homes to sell.
I know two that got their licenses in CA in the past two years, and went back to their old jobs due to the fact that there are not that many homes for sale, and they never were able to get any sales contracts of their own.
Take into account the time of year and thin trading.
Plus, all of the Asian money in our Treasury market is keeping the long end of the curve down. Until there is demand from investors to increase those rates, we won't see them rise. This is good news for our mortgage market.
I just hope the Fed stops raising short-term rates soon, and it looks like they will.
Greenspan pulling his usual stunt to create a recession just before an election when Pubbies are the incumbents.
For the record, I was joking when I said 'Time to panic'.
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).
Could you please be just a wee bit more adamant?
Not gonna happen sour pickle.
Now if you had said "We're doomed" then there would be no doubt, lol.
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