Skip to comments.Dow drops more than 400 points as Treasury yields spike on job openings surge
Posted on 10/03/2023 9:41:23 AM PDT by Diana in Wisconsin
The Dow fell more than 400 points Tuesday morning, turning negative for the year, as US Treasury yields surged to their highest levels in over a decade.
The Dow fell 427 points, or 1.3%. The benchmark S&P 500 declined 1.5% and the Nasdaq Composite lost 1.8%, extending the late summer selloff in stocks.
Stocks have marched higher for most of this year, as artificial intelligence excitement took hold on Wall Street and powered tech stocks to stratospheric heights.
But that rally petered out in August, as strong economic data had investors worried that a resilient economy and piping hot labor market would lead the Federal Reserve to hold interest rates higher for longer to tamp down inflation.
The Fed signaled last month that it could introduce one more hike this year and keep rates elevated through next year. Treasury yields have spiked and the US dollar has surged in the weeks since, continuing to chip away at the stock market’s gains from the spring. Stocks tend to suffer when government bond yields are elevated, since it means investors can get high returns on less risky assets.
Yields continued to rise on Tuesday, with their climb accelerating after fresh data from the Bureau of Labor Statistics showed that the number of US job openings unexpectedly soared to an estimated 9.61 million open jobs in August. That’s up from July’s upwardly revised estimate of 8.92 million openings and above the consensus 8.8 million estimate among economists.
The yield on the 10-year Treasury note on Tuesday climbed to 4.75%, its highest level since August 2007. The 2-year rose to 5.13%, around its highest level since July 2006.
CNN’s Fear & Greed Index fell to an “Extreme Fear” reading of 17, its lowest level since last October.
(Excerpt) Read more at channel3000.com ...
“Unless the [jobs] report comes in lower than expected, Wall Street will likely start to fully price in at least one more Fed rate hike before the end of the year,” said Ed Moya, senior market analyst at OANDA.
I didn’t feel a thing!........................
Bidenomics! Greatest economy eva!
Down around 2,000 since Biden announced the benefits of his “Bidenomics”. The stock market tells the truth.
Have had my assets in 4-wk T-bills for some time.
Let's see if we can get another historically high yield on them like we did last May when it crossed 6%.
It will be 4 years of no real return under Biden. Inflation crushing purchasing power, money going to illegals and Ukraine, what's not to like.
I lost $10k in 3 hours.
Will the market lie to help out the rats? Bush ‘41 ‘gave us the worst economy in the last 50 years’. It really didn’t.
I’d really like to see a market crash put Trump back in office and then have the government gutted. It’s gonna be awesome. I’ll lose big too and hope it’s back to normal sooner rather than later.
Nothing bad has happened to the DOW in October before…
Bribemonics-a form of Bidenomics and subset of Obamanomics which is closely related to Keynesian Economic model is a Democratic and Intelligence agency generated Economic model that enriches the aforementioned. The concept of printing money endlessly and devaluating it (called the inflation reduction act) and simultaneously funding foreign wars, while punishing those working Americans while lavishly supporting criminals and illegals aliens. All the while taking huge amounts of some recycled taxpayer money as kickbacks, as well as outright bribe money from hostile foreign governments, not paying your fair share of taxes, while aggressively pursuing your political opponent for non-crimes and forwarding classified briefings to foreign entities for the ‘family brand’.)
Example 1: Grandma used her Social Security check of 650 dollars a month to buy dogfood, because the inflation reduction act worked so well. Meanwhile, people from central america, that illegally entered the United States got free housing, cell phones, lawyers, healthcare, and 2200 dollars a month. The Drug Cartels, Chinese drug manufactures, Child traffickers all saw return on their bribe investments to Democrats by putting arm bands on the migrants crossing the border for tracking purposes.
Example 2: The Unions believed that a UAW strike to increase wages, at the same time US motor companies are struggling with the ‘Green new deal’ now makes cars so unafforadable that the plants shut down and they went on welfare. Meanwhile the kickback money from the Unions to the Democratic politicians, via the Union Pension funds, was reimbursed via taxpayer money and government debt. This resulted in more job losses and damaged economy.
Bribemonmics: Coming to a unemployment line, stagnant market, and probably real estate crash near you.
Piping hot job market? What’s in that pipe? Is this IT jobs, oil and gas jobs to Mickey D’s?
It seems most prognosticators are in a near perpetual state of stunned disbelief, at least when not telling us how to live our lives.
As long as this mountain of printed money remains in the economy the value of the dollar will be down. All the FED is doing now is trying to create the illusion of removing money from the economy. Perhaps they are trying to employ it somewhere else like interest payments? Maybe they have some new theory. They seem to play on that a lot. This mountain of money has created a new territory.
You can't hit the accelerator on anything this much and not expect a major change to something different than you had before. Just not possible. This money, printed out of thin air, does not go away. You can either increase productivity to back it or devalue the currency. We are not increasing productivity.
The only thing that can save you from loss is hard assets. Equities might eventually compensate but probably not fully for a very long time. Anyone holding bonds before rates went up is going to take a permanent beating which is why I absolutely hate bonds. You may sell old bonds and replace them with higher return new ones buy you will have less to invest than what you paid for the old bonds. That is a going out of business model.
The FED is creating something they can't manage quickly. Each step they take to raise rates creates inertia in the direction they are taking. They can't unwind this without creating a worse problem than they are trying to solve.
Test me on these things. Show me where I am wrong.
The problem with the government massaging numbers is reality always wins in the end. They can massage statistics, they cannot massage outcomes.
My sincere condolences.
It will be interesting to watch this quarter. Normally the 4th quarter has the highest gains of the year.
However, we falling fast into a global economic recession that doesn't have an easy exit.
They spike because investors lose confidence in the stability of the U.S. dollar.
The problem is there isn't enough money (in terms of Eurodollars) to perform international trade.
We're in price inflation - but monetary deflation.
Not true. The dollar index is going higher and higher.
It's spiking because a great majority of banks hold customer deposits in securities like US Treasuries - and their balance sheets are about to explode - thus causing a need to sell those assets at a loss.
My Merrill Lynch people told me last week that they were expecting a down few weeks all because of Student Loans have to start being repaid again starting in October. That is taking billions out of the economy that have been being spent the last couple of years.
Well my broker’s E.F. Hutton, and E.F. says.......
2. The Index only measures the value of the U.S. dollar relative to other major currencies. I believe these rising interest rates reflect a decline in confidence in the U.S. dollar among Americans.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.