Dow sinks 360 points as stocks drop most since August

[TomCADem]

Source: MSN/

Stocks closed sharply lower Tuesday, falling for a second day as the first major sell-off of the new year intensified.

The Dow dropped 362 points, with UnitedHealth as the biggest decliner. The 30-stock index posted its biggest percentage decline since May. It also fell 411.06 points at its session low.

The S&P 500 pulled back 1.1 percent, with health care as the worst-performing sectors. The index snapped its longest stretch ever without back-to-back declines of at least half a percent. It also had its worst day since August

The Nasdaq fell 0.9 percent.

Read more: https://www.msn.com/en-us/money/markets/dow-sinks-360-points-as-stocks-drop-most-since-august/ar-BBIsozd?li=BBnb7Kz&ocid=UE01DHP

[PJMcK]

1. Guess why

Trump is fucking shit up.

He's an idiot.

[DeminPennswoods]

16. The Berkshire/Amazon/JPM announcement

on their healthcare initiative caused the health insurer stocks to drop like rocks.

[Fred Sanders]

3. Tulips. Buy more tulips! America does not have the worlds most overvalued stock markets...

that is just some "economists" and "statistics" stuff.

[elleng]

4. Likely reason:Amazon, Berkshire Hathaway and JPMorgan Team Up to Disrupt Health Care.

SEATTLE — In a sign of just how fed up corporate America is with the country’s expensive and often confusing health care system, three behemoths — Amazon, Berkshire Hathaway and JPMorgan Chase — announced on Tuesday that they would form an independent health care company for their employees in the United States.

The news added further uncertainty to an industry already reeling from attempts by new players to attack a notoriously inefficient health care system. The lines between traditionally distinct sectors, such as pharmacies, insurers and providers, are increasingly blurring.

CVS Health’s deal last month to buy the health insurer Aetna for about $69 billion is just one example of the shifts underway. Amazon’s potential entry into the pharmacy business is also reverberating.

The three companies provided few details about the new entity, other than saying it would initially focus on technology to provide simplified, high-quality health care for their employees and their families, and at a reasonable cost. . .

News of the announcement sent the stocks of established health care providers plunging, and touched off a wave of speculation about what the new company might do. It was unclear whether the new venture would make it easier for consumers to understand their health care costs and access medical records, or take on more ambitious changes like the wider use of telemedicine and virtual doctor visits.'>>>

https://www.nytimes.com/2018/01/30/technology/amazon-berkshire-hathaway-jpmorgan-health-care.html?

The headline does NOT serve to inform well, imo.

[PoindexterOglethorpe]

5. 1.37% is sharply lower? Really?

I wonder about the math skills of those who are writing this stuff.

[lapfog_1]

8. In any negative move in the market there is always a "signal"

The market was overvalued based on unrealistic expectations of corporate profits in the Trump era. They have been on a "run" of nearly constant increasing value since the dark days of 2009-2010.

This one-day sell-off could be that "signal". If true there will follow a period ( could be days or weeks or even months ) of "choppy waters" where the market will show increasing volatility on both the upside and downside with 1000 points swings both directions as suckers (err investors) think that a market correction has taken place and there are now "buy opportunities" in the market. Eventually, it will dawn on investors that the swings show a negative trend and the smarter ones will head for the exits leaving ( usually ) the little guys to hold the bag as the market heads for a "bagel" (West Wing Reference).

In all reality, the market is due for a correction, the US is due for a mild to moderate recession ( again ). All of which could be exacerbated by an idiot in the White House and Janet Yellen possibly leaving the Fed Chair.

[7962]

15. My "buy opportunity" will be below 20k. Which isnt unrealistic really

And i must admit, i bought on election day +1 because as much as i thought trump was a disaster, the futures reaction was such an OVER reaction. Just wish i'd made a bigger move. But its time to start looking at 1/2ing it and seeing where this goes like you said.

[DeminPennswoods]

17. Mutual funds were selling at the end of the year

They must see a correction ahead and wanted to lock in gains by selling high.

[LanternWaste]

12. As I wonder about those who dig in their heels at any narrative...

As I wonder about those who dig in their heels at any narrative which doesn't validate their biases.

[Gore1FL]

14. That's pretty significant for one day. nt

[TeamPooka]

6. Thanks Trump!

[lapfog_1]

7. Actually Ali Velshi gave a fairly complete explanation

It has to do with the Bond markets tanking around the world.

The US government backed bonds had to hike the yield to move them... for a couple of reasons. The first is that China has decided to move to a hold rather than a buy on US bonds, the second is that the US has to start actually moving (selling) more bonds because of the tax cut rushed through Congress. The bills for that cut are actually coming due now so to make up for the decrease in revenue, the US has to float that 1.5T of additional debt starting now.

To sell that much in the bond market they had to increase the yield, plus with the Chinese withdrawing from the market moving that much paper is even more difficult. Increasing the yield may move the US debt BUT it also makes it harder for companies to market their own bonds... meaning it is now more difficult for companies to use this mechanism to borrow to cover short-term cash flow issues. That means the stock value of the entire market has to decrease on the expected increased cost of borrowing.

It is as if the Fed just announced a prime rate increase.

So there was a worldwide sell-off in the market.

Directly related to the tax cut plus Donald's insults to China ( including the 50% tariff he imposed on imported washing machines and the 30% tariff on solar panels )

Thanks Trump... Thanks Repukes.

[wishstar]

9. Also American investors can do some profit taking now at lower tax rate

There have to be some investors who have been waiting to sell stocks until the anticipated tax cuts were law and this is a good time to adjust portfolios after such a big runup in an overheated market that is overdue a correction.

[bronxiteforever]

10. Brilliant points!

[underpants]

11. Great synopsis

The best!

Seriously thanks.

[7962]

13. And interest rates are likely to continue rising. Which really should have started a few yrs ago.

The "free money" is a major cause of the market being where it is now; other investments werent bringing much of a return, so everyone piled into the market

[IronLionZion]

18. That was a very good analysis, thanks for sharing

this was the wrong time for tax cuts. It benefit a few while screwing over many.

I'm overexposed to equities at the moment and plan to gradually shift some over to bonds as they get cheaper.