Dow slump extends into its second day – TheTradersWire

Dow slump extends into its second day

Analysis: Yes, President Trump gets credit for the economy
Analysis: Yes, President Trump gets credit for the economy

Dow slump extends into its second day

  @CNNMoneyInvest

Dow futures fell 175 points early Tuesday, continuing a rare stock market slump.

Jeff Bezos, Warren Buffett and Jamie Dimon’s plan to get into the health insurance business sent health care companies tumbling. UnitedHealth(UNH) dropped 7%, CVS(CVS) was off 6%, and Walgreens(WBA) shed 3%.

The Wall Street Journal also reported that Apple will make 20 million fewer iPhone X’s this coming quarter than it had originally planned. The iPhone X, Apple’s newest and most expensive phone, hit stores in November. Apple will give investors an update on sales Thursday during its year-end earnings report.

Apple(AAPL) dropped 1% early Tuesday.

The market selloff so far is just minor turbulence in a relentless market climb. The Dow fell 177 points Monday, its worst day since September.

But the Dow is up 8,000 points since President Trump’s election. A growing global economy, strong corporate earnings and a wave of consumer confidence are pushing stocks higher. Congress’ tax cuts and Trump’s deregulation agenda have investors and CEOs feeling optimistic.

There are still warning signs that the market could be entering a long-overdue correction. The VIX(VIX), Wall Street’s fear gauge, hit its highest level since August on Monday.

The bond market is unnerving stock investors. On Monday, the 10-year Treasury yield climbed above 2.7% to the highest level in nearly four years. Yields move in the opposite direction of price.

While bond rates remain historically low, a rapid rise above 3% could spook Wall Street.

If trouble comes to the market, many analysts think it will start in bonds. If investors sell bonds, their interest rates will rise sharply from their current historic lows. And when investors can get better returns from bonds, risky stocks start to look less attractive.

The Federal Reserve’s planned interest rate hikes are also at play.

“We have become an asset price dependent economy and one addicted to artificially low rates,” Bleakley Advisory Group’s Peter Boockvar wrote in a note Tuesday.

Published at Tue, 30 Jan 2018 13:57:20 +0000

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