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05 October 2018
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| financial markets (The Total Investment & Insurance Solutions) |
The yield on the 10-year Treasury note has soared over the last three
days and hasn't been this high since mid-2011. Bond prices are falling as
investors sell them, but Wall Street is also concerned that spiking interest
rates could eventually slow the economy.
KEEPING SCORE: The S&P 500 index lost 18 points, or 0.6 percent, to
2,883 as of 11:45 a.m. Eastern time. The Dow Jones Industrial Average inched
slid 203 points, or 0.8 percent, to 26,423.
Technology companies and smaller, more U.S.-focused companies continued
to suffer steep losses. The Nasdaq composite skidded 101 points, or 1.3
percent, to 7,778 as technology and internet companies continued to struggle.
The Russell 2000 index lost 17 points, or 1.1 percent, to 1,629.
The Nasdaq has dropped 3.4 percent this week and the Russell has tumbled
4 percent. Both indexes are on track for their biggest drops since late March,
and the Russell is on pace for its lowest close since late May.
IT'S A LIVING: The Department of Labor said employers added
significantly more jobs in July and August that it previously thought, which
made up for a slightly disappointing gain in September. The September total was
probably reduced by the damage Hurricane Florence did to the Carolinas.
Employers have added 190,000 jobs on average over the last three months,
and the employment rate fell to its lowest level since December 1969.
Friday's data suggest the economy should keep growing at a strong clip,
which means corporate profits should continue to grow. That's a good sign for
stocks. At the same time, there are few signs of a big increase in the pace of
growth or inflation. Either of those would push the Federal Reserve to raise
interest rates at a faster pace, which would start to slow down the economy.
BONDS: Bond prices kept falling. The yield on the 10-year Treasury note
rose to 3.22 percent from 3.19 percent. The yield on the 10-year Treasury is an
important benchmark for longer-term interest rates and it hasn't been this high
since July 2011.
The decline in bond prices and increase in yields have led to big gains
for banks in the last few days because higher interest rates mean they make
bigger profits on mortgages and other loans. Bond yields in Europe also rose.
SWITCHEROO: The sell-off in technology and internet companies and
retailers continued. Intel lost 1.9 percent to $47.63 and Apple slipped 1.4
percent to $224.74 while Google's parent company, Alphabet, sank 1 percent to
$1,164.73. Among retailers, Netflix slumped 4.4 percent to $347.58.
Those sectors have been the biggest gainers on the S&P this year,
but have taken sharp losses this week. Banks and industrial and energy
companies, which have struggled in 2018, have changed place and performed
better than the broader market.
Banks were mixed Friday after big gains the previous two days. Online
brokerage E-Trade rose 0.9 percent to $52.95 while Goldman Sachs lost 0.9
percent to $225.45.
Several major banks will report their third-quarter results late next
week as the next round of company earnings gets underway.
UNFOLLOWED: Tesla stock fell 5.5 percent to $266.26 after CEO Elon Musk
taunted the Securities and Exchange Commission just a few days after he agreed
to settle an SEC lawsuit triggered by a tweet he sent in August.
As part of that settlement, Musk agreed to step down as chairman and
submit to oversight when he's communicating company news. His criticisms of the
SEC don't appear to be company news, but they may have worried investors who
hoped his feed would be a little more boring from now on.
Musk and Tesla are also paying $20 million each to end the lawsuit.
COSTLY: Wholesale club operator Costco gave up 3.7 percent to $223.08
after it said it discovered technology problems related to its financial
reporting processes. Costco said it is investigating, but hasn't found any
problems with its past earnings reports so far.
OVERSEAS: European stocks fell for the second day in a row. Germany's
DAX lost 1.1 percent and the CAC 40 in France dropped 0.9 percent. Britain's
FTSE 100 fell 1.2 percent. Bond prices in all three countries fell again
sending yields higher.
Japan's benchmark Nikkei 225 fell 0.8 percent and the Kospi in South
Korea dropped 0.3 percent. Hong Kong's Hang Seng fell 0.2 percent.
ENERGY: Benchmark U.S. crude rose 0.6 percent to $74.75 a barrel in New
York and Brent crude, the standard for international oil futures, picked up 0.3
percent to $84.81 a barrel in London.
CURRENCIES: The dollar slipped to 113.69 yen from 113.86 yen. The euro
dipped to $1.1514 from $1.1515.The
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