Boy there is a lot to discuss so we’ll dive right in. After another round of overseas selling overnight, stocks were immediately under pressure as the trading day began. After an initial selloff, stocks seemed to bide time while we waited for the second day of testimony, this time in front of the Senate Banking Committee, by Janet Yellen. Once again, the Fed Chair is somewhat between a rock and a hard place, thus she really can’t give market participants the soothing words of wisdom that they so longingly crave. The result was stocks cascading lower and temporarily violating a rather serious support level of 1812 on the S&P 500.
But at about 2:00 we got a rumor (don’t you love rumors) that OPEC just might be willing to address the plunge in oil prices (yes oil prices had been falling again), and stocks rallied from a Dow that had been down more than 400 points to a more manageable 250 point decline. By the close, the Dow Jones Industrial Average was down 254 points to finish the day at 15,660. The S&P 500 was down 22 points to close at 1829. Gold spiked $49 to trade at $1,244 per ounce, while oil still ended down $.17 to trade at $27.28 per barrel WTI.
Once again NIRP (negative interest rate policy) was discussed in the Yellen hearings. Amazingly the 10 year Treasury note’s yield fell to nearly 1.50%, but then settled back to 1.64%. Why are treasury bonds being bought so aggressively, sending rates plummeting? Well, with negative rates around the world, our 1.50% looks pretty darn good-thus the inflows of money to purchase our bonds.
Remember what Warren Buffett said about Bear Markets- Be greedy, when others are fearful. Unfortunately, it is human nature to be fearful when others are fearful. We’ll keep you informed throughout these stressful times, and we won’t give in to the fear.
Have a nice evening everyone.