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Thursday, 25 October 2018

Dow erases gains for the year, tumbles more than 600 points as stocks extend October swoon

CW8888: Few more trading days to go before October Effect ended.

Stocks plummeted on Wednesday as a sharp drop in tech shares and worries about corporate earnings added fuel to this month's steep pullback.

The Dow Jones Industrial Average dropped 608.01 points at 24,583.42 and erased all of its gains for 2018. The S&P 500 dropped 3.1 percent to 2,656.10 and also turned negative for the year. The Nasdaq Composite fell 4.4 percent to 7,108.40— entering correction territory — as Facebook, Amazon, Netflix and Alphabet all traded lower.

"An increasingly murky macro picture is clouding the 2019 earnings outlook leaving investors to largely shrug off a solid start to the third quarter earnings season," said Alec Young, managing director of global markets research at FTSE Russell. "While valuations have certainly come down in recent weeks, at 16 times forward earnings for the Russell 1000 index, they aren't in the bargain basement by any means, especially if earnings growth slows more than expected next year."

Stocks have taken a beating this month. The Dow has dropped 7.1 percent in October, while the S&P 500 has pulled back 8.9 percent. The Nasdaq, meanwhile, has tumbled 11.7 percent.

Netflix tumbled 9.4 percent as investors second-guessed valuations for the once high-flying video streamer. Facebook and Alphabet both fell more than 5 percent, while Apple dropped 3.4 percent. AT&T, meanwhile, dropped more than 8.1 percent after releasing its quarterly results.

Worries about a slowing economy under pressure from rising interest rates grew after the Commerce Department said new home sales fell to a two-year low. The data also hit homebuilder stocks.The SPDR S&P Homebuilders ETF (XHB) dropped 3.5 percent.

"The housing numbers were not good," said JJ Kinahan, chief market strategist at TD Ameritrade. "There's a lot of uncertainty heading into the end of the year. It just feels like people feel more comfortable spending short-term rather than long term."

Bank shares fell on fears of slowing growth for mortgage and other loans. The SPDR S&P Bank ETF (KBE) dropped 4.1 percent. Shares of J.P. Morgan Chase and Citigroup both pulled back more than 1.5 percent. Bank of America's stock dropped 3.1 percent.


  1. Happy 89th anniversary of Black Thursday 1929! LOL!

  2. "i feel the Earth, move under my feet!

    i feel the Sky tumbling down, tumbling down"

    Carole King.

    Not yet lah!

  3. Dow surges 400 points as tech jump leads recovery from Wednesday's sell-off

    1. Stocks become much more volatile during the last stage of bull.

      Remember 1999 and 2007? ;)

      Probably another year left of higher highs for US stocks .... but 10% corrections may be common during this period.

      That said, I suspect stocks in most countries have started, or starting, a new secular bull cycle, similar to early 1950s and early 1980s.

      Doesn't mean no recessions or no bear markets, but during secular bull, stocks usually give +ve returns over rolling 5-year & 10-year periods.

      During secular bear or long-term consolidations like in 1930s/40s, 1970s & 2000s, rolling 5-year and 10-year stock returns are either flat or -ve.

      It's a very good time for 20-something people who just started work & want to build long-term wealth in stocks! :)

  4. Like i started in 1987/1988 till now.

    But i was 40 then when my son was born.

    Started late got some advantages too - larger cash & CPFIS capital.

    i was crazy then even at that age i invested "Lock, Stock & Barrel"

    What about now?

    “one flew east, one flew west, one flew over the cuckoo's nest”.

    So will i fly over the cuckoo's nest?

    i think i will if i become a pig lol!


    1. Ya!

      If pig can fly, will definitely fly over the cuckoo's nest

  5. Looking at the current Singapore Blue to Semi Blue chips, many stocks have reached the 52 week's lows and the DOW is still far away from 2016 index level.

    It's quite scary to me.

    But if U started from kosong now, start to nimble lol.

    Slowly hoh!

    Do it at your own risks!

  6. Stocks closed lower on Monday, giving up sharp gains from earlier in the day in a wild session that saw the Dow Jones Industrial Average travel more than 900 points. The S&P 500 closed in correction territory, down 10 percent from its recent high.

    Traders blamed the possibility of more U.S.-China tariffs coupled with a drop in tech shares for the decline.

    The Dow fell 245.39 points to 24,442.92, erasing a 352-point gain, as Boeing dropped 6.6 percent. At the lows of the day, the Dow was down 566 points before coming back shortly before the close. The 30-stock index also briefly dipped into correction territory.

  7. Even my Singapore stock nimbles are considered a bit too early by today climate.

    My US portfolio has lost about 15 % now.

    It takes weeks to months(even to years) to gain 15% but only days to 1 or 2 weeks to lose 15 %.

    Such is the "nature of always in the market" unlike sniper hits & runs tactics.

    One thing is common for all in the stock market (proudly borrow from EY) is "Trade the Best, Leave the Rest"

    How to put this wisdom into practice is all together another kettle of fish.

    Like to quote again this for reminder:-

    “If to do were as easy as to know what were good to do, chapels had been churches, and poor men’s cottages princes’ palaces".

  8. U.S. stocks snapped higher Tuesday as markets eased some of the month's brutal losses before the end of October.

    The S&P 500 rallied more than 1.5 percent to close at 2,682.63 as communications, energy and materials stocks carried the index out of correction territory. Shares of Charter Communications, DISH Network and Twitter all rose more than 4 percent each.

    The Dow Jones Industrial Average surged by 431.72 points to finish at 24,874.64. Goldman Sachs, McDonald's and Boeing all outperformed the broader blue-chip index.

    The tech-heavy Nasdaq Composite rose more than 1.5 percent to close at 7,161.65. That index climbed thanks to a 5.2-percent rally in Intel and a 4.7-percent gain in CNBC-parent Comcast; e-commerce giant Amazon shed 0.5 percent during the session.

    The rebound on Tuesday followed a shaky start to the week in the prior session that saw stocks giving up sharp gains. The Dow traveled more than 900 points on Monday. Market participants cited the possibility of more U.S.-China tariffs, a drop in tech stocks and worries over higher interest rates for the decline.

    After Tuesday's comeback, the Dow is down 5.9 percent this month, still its worst performance since August 2015. The S&P 500 is off by 7.9 percent in October, on track for its worst month since May 2010. On Monday, the S&P 500 closed in correction territory, down 10.2 percent from its record.


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