Wow, what a crazy day. Not often do you find stocks down as much as they were at the close, yet feel pretty good about it if you’re a bull. That’s because at one point today, the Dow was down 460 points, yet rallied in the last hour to end down only 173 points. There were plenty of things to “blame” for today’s craziness. First, a large heath care merger deal fell through which sent ripples through the hedge fund community, which certainly caused some forced liquidation. On the economic front the Retail Sales number disappointed as did the Empire State Manufacturing number. Despite posting decent earnings, banks continue to sell off (mainly interest rate driven), and this afternoon behemoth retailer Wal-Mart lowered their 2015 earnings outlook.
Also, very disconcerting has been the collapse of oil prices (good for consumers but not so much for many stocks), and the massive rush toward government bonds. At one point this morning, the 10 year Treasury note’s yield fell well under 2%. Of course, in my mind the biggest concern (not easily quantified I grant you) for market participants is the unknown of the Ebola virus. Word today of a second victim in Dallas having traveled to Cleveland and back was very unsettling.
As it was, by the close, the Dow Jones Industrial Average was, as mentioned, down 173 points to finish the day at 16,141. The S&P 500 was down 15 points to close at 1862. Gold was up $5.70 to trade at $1239 per ounce, while oil was down $.35 to trade at $81.49 per barrel WTI.
Perhaps we saw some capitulation today, or perhaps we saw levered hedge funds being forced to sell. The collapse of oil, rally in the dollar and plunge, once again, in interest rates, seems to have caught many big players off sides. This will all be sorted out over time, but we’ll continue to look for sale items as this “correction” unfolds.
Have a nice evening everyone.