We’ll Call It A Draw


Stocks once again were lower at the open after a difficult night in overseas markets. But being that this is turnaround Tuesday, those loses were quickly erased and stocks climbed to positive territory in late morning trading. After a second round of selling, stocks once again clawed their way back into positive territory. All this despite another dismal day for oil, and fears of deflation and negative interest rates once again making the rounds. Unfortunately, the bulls couldn’t quite hold the gains in the end.

By the close, the Dow Jones Industrial Average was down 12 points to finish the day at 16,014. The S&P 500 was down 1 point to close at 1852. Gold was down $8 to trade at $1,189 per ounce, while the aforementioned oil was down $1.36 to trade at $28.38 per barrel WTI.

As mentioned the talk of negative interest rates is fascinating, with the Fed just so recently having been so determined to raise rates at least four times this calendar year. The bond market has been telling a different story than the Fed since the December rate hike. Indeed, with the 10 year Treasury note yield just above 1.70%, that now puts the yield of the S&P 500 some 65 basis points above the 10 year. Remember, as prices rose through 2013 and 2014 especially, that S&P yield had fallen below the 10 year Treasury. With the resetting of stock prices, that dividend yield is becoming more attractive- especially should we see a world of negative interest rates.

Have a nice evening everyone.

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