Adam Shell USA TODAY Published 2:56 PM EST Dec 4, 2018 So much for the all-clear sign on Wall Street. Just when it looked like the battered bull was healing, the Dow Jones industrial average suffered a drop of more than 700 points Tuesday when the bond market sent an ominous signal: The yield on the two-year U.S. government bond rose above the interest rate paid out by five-year notes. Why the pessimism over that obscure-sounding shift? Historically, when short-term rates rise above longer rates -- which is dubbed an "inversion of the yield curve" -- it signals an economic slowdown is coming. "Investors are questioning whether the Treasury market is telegraphing a more material economic slowdown," says Quincy Krosby, chief market strategist at Prudential Financial. But fears of a coming recession weren't the only thing worrying investors. Other fears dragging down stock prices Tuesday include: Fading glow of trade cease fire The optimism following the cease-fire on … [Read more...] about Why is stock market down today? Yield curve sends warning to investors
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Fred Imbert CNBC Published 12:35 PM EST Dec 4, 2018 Stocks fell sharply on Tuesday as investors worried about a bond-market phenomenon signaling a possible economic slowdown. Lingering worries around U.S.-China trade also sent jitters down Wall Street. The Dow Jones Industrial Average fell as much as 600 points, led by losses in Apple. Shares of Apple dropped 3.3 percent after HSBC downgraded the company's stock to hold from buy as it faces "the reality of market saturation." The S&P 500 declined 2 percent as the financials sector lagged. The Nasdaq Composite also dropped 2.3 percent. The yield on the three-year Treasury note surpassed its five-year counterpart on Monday. When a so-called yield curve inversion happens — short-term yields trading above longer-term rates — a recession could follow, though it is often years away after the signal triggers. Long-term rates fell to session lows around … [Read more...] about Why the stock market rally has stalled
A volatile week across global stock markets has escalated into a heavy sell-off, with European stock markets plunging to their lowest level in 20 months on Thursday. In the UK, the FTSE 100 entered correction territory – falling 10% from its peak in May - after Wall Street suffered its biggest drop in eight months on Wednesday. Why are markets falling? The sell-off is being fuelled by mounting investor concern over rising US interest rates, which could curtail growth in the world’s biggest economy and have a damaging knock-on effect for global growth. The yield, or interest payment to investors, on two-year US government bonds hit the highest level since 2008, in a sign of the rising borrowing costs for companies and consumers. Donald Trump also raised eyebrows among investors by branding the US Federal Reserve “crazy” for planning further rate rises. The US economy is booming, propelled further by Trump’s tax cuts earlier this year, which has prompted the … [Read more...] about Why are stock markets falling and how far will they go?
Adam Shell USA TODAY Published 6:40 PM EDT Oct 10, 2018 It sure felt like a sell-everything day on Wall Street: Stock prices plunged, and talk of a panic and comeuppance for the nearly 10-year old bull market took hold. So why did stock prices fall so far, so fast, seemingly out of nowhere? And what explains the 832-point drop for the Dow Jones industrial average just a week after the blue-chip stock gauge notched a record high? While there's never a perfect answer to explain how market psychology can turn on a dime, here's how financial pros are making sense of the worst day for the Dow since February, and a big decline in popular technology stocks. What sparked the fall? Nervousness had been building for days on Wall Street. The catalyst was the recent spike in the yield on a closely watched government bond to a seven-year high. The 10-year Treasury note -- whose key rate impacts the pricing on things ranging from fixed-rate mortgages to stocks to virtually every financial … [Read more...] about Why did stock market drop so much today?
Investors’ patience with European stocks is wearing thin.This year was supposed to be the moment when European equities would finally catch up with the U.S. stock market, lifted by a revival in economic growth and corporate earnings while worries over the region’s populist leaders was set to fade. Instead, Europe has been the worst performer among developed countries in the first half of the year.Unnerved investors, including Schroders Plc, have pulled out of overweight positions on concerns spanning from Italy’s political crisis to the damage from a simmering trade war and the European Central Bank’s dithering on the interest rate outlook. The level of disenchantment has been so strong that the region’s stock valuations have tumbled to near 2016 levels, prompting a number of contrarian asset managers to start shopping for bargains.Here are five charts that look at key features of European stocks following their roller-coaster rise in the second … [Read more...] about Five Charts Show Why European Stocks Are Developed World’s Worst