On 10/10/18 and
10/11/18, the stock market took a double dip with two day correction that took
the Dow down from 26,430 to 25,052. It took the S&P 500 down from 2880 to
2728 and it took the Nasdaq down from 7737 to 7329. We will recover from as the
economy adjusts.
The triple witching
moment came as the companies suspended their stock buy-backs prior to quarterly
earnings reports. The Federal Reserve was making plans to add a couple of .25
increases in the 2.00 fed interest rate. The third blow I believe is that
shareholders knew that the stocks that were over-valued were the stocks from
companies who had no viable long-term plan.
The software did the rest. There is also a large group of shareholders
who “play the market” and sell to take profits and then buy stocks at cheaper
valuations after the correction. This is the rollercoaster ride. The rest of us
just stay put.
Higher Treasury Yields
and Fed Interest Rate Increases anticipated. Housing and Autos expect lower
sales in US going forward. Rising interest rates affect housing and auto sales.
All of this makes sense. Housing and Auto prices are too high and these
industries expect buyers to hold off. Here’s the “play by play” for the 2 day
correction.
On 10/10/18, the Dow closed
down 832 points on 10/10/18 from 26,430 to 25,599. This is a 3% correction. The
S&P 500 closed down 94 points to 2786. Down 3.3%. This is usually where
your 401k is invested. The Nasdaq closed down 315 points to 7422. This is a 4%
drop
On 10/11/18, the Dow
closed lower at 25,052. The S&P 500 closed at 2728 and the Nasdaq closed at
7329. The second dip was 547 points. The
total 2 day correction was 1379 points. This was the second correction in 2018.
The first was in February 2018.
See prior post: On 2/5/18 stocks prices started to correct and the Dow
Jones Industrial Average declined by 1,175 points to 24,345. On
2/7/17, the DOW closed at 20,090. (Posted February 7, 2018)
The Long View - The
Dow moved from 18000 in 2016 to settle at 25,052 in 2018 so far in 2018.
Stocks move up and
down when day traders want to sell and lock in profits. The February 2018
correction sent the Dow bouncing around the 24,000 to 25,000 range. Now I expect it to bounce around from 25,000
to 27.000.
The 30 companies that
make up the Dow Average have seen GE depart and other large companies will
follow.
Your 401k funds are
mostly in the S&P 500. That is the largest 500 companies listed on the NY
Stock Exchange.
The Nasdaq lists
Apple, Alphabet (Google), Microsoft, Amazon, Facebook, Roche (Pharma), Intel
and hundreds of companies you never heard of. Most are not “tech companies”.
There are lots of
companies with low stock values. Ford is at $8.81 per share. GE is at $12.72
per share. Sears is at 34 cents per
share. JC Penny is at $1.81 per share.
See the list of the
100 biggest losers in this latest correction at:
The losses are small
and across the board. Eventually I expect weakness in healthcare as prices are
lowered and in lending as consumers and corporations reduce their debt.
Norb Leahy, Dunwoody
GA Tea Party Leader
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