U.S. Stocks Fall, Dow Heading for Worst Week Since 2012

[Purveyor]

Source: Bloomberg

By Nick Taborek - Jan 24, 2014

U.S. stocks fell, pushing the Dow Jones Industrial Average (INDU) toward the biggest weekly decline since May 2012, as equities slumped worldwide amid a selloff in emerging-market currencies.

Caterpillar Inc., General Electric Co. and Boeing Co. slid more than 2.6 percent to lead losses in the Dow. Kansas City Southern plunged 13 percent, the biggest retreat since 2008, after reporting lower-than-estimated earnings. International Game Technology tumbled 13 percent as the maker of slot machines posted first-quarter profit that missed analysts’ projections.

The Standard & Poor’s 500 Index retreated 1.4 percent to 1,802.88 at 12:48 p.m. in New York. The benchmark index has declined 2.1 percent this week to the lowest since Dec. 17. The Dow slid 209.20 points, or 1.3 percent, to 15,988.15 today. The 30-stock gauge is down 2.9 percent this week. Trading in S&P 500 stocks was 57 percent above the 30-day average at this time of day.

“The volatility of the emerging markets and the currency impacts are affecting U.S. markets,” Eric Teal, who helps oversee $3.5 billion as the chief investment officer at First Citizens BancShares Inc. in Raleigh, North Carolina, said by phone. “Following the strong gains of last year, I think it’s to be expected that you might have an overreaction here of selling.”

Read more: http://www.bloomberg.com/news/2014-01-24/u-s-stock-futures-decline-on-emerging-market-currencies.html

[Purveyor]

1. RELATED: Contagion Spreads in Emerging Markets as Crises Grow

By Ye Xie and John Detrixhe - Jan 24, 2014
The worst selloff in emerging-market currencies in five years is beginning to reveal the extent of the fallout from the Federal Reserve’s tapering of monetary stimulus, compounded by political and financial instability.

The Turkish lira plunged to a record and South Africa’s rand fell yesterday to a level weaker than 11 per dollar for the first time since 2008. Argentine policy makers devalued the peso by reducing support in the foreign-exchange market, allowing the currency to drop the most in 12 years to an unprecedented low.

Investors are losing confidence in some of the biggest developing nations, extending the currency-market rout triggered last year when the Fed first signaled it would scale back stimulus. While Brazil, Russia, India, China and South Africa were the engines of global growth following the financial crisis in 2008, emerging markets now pose a threat to world financial stability.

“The current environment is potentially very toxic for emerging markets,” Eamon Aghdasi, a strategist at Societe Generale SA in New York, said in a phone interview yesterday. “You have two very troubling things: uncertainty about the Fed policy, combined with concerns about growth, particularly in China. It’s difficult to justify that it’s time to go out and buy emerging markets at the moment.”

Global Declines

Developing-nation currencies sold off after a report from HSBC Holdings Plc and Markit Economics indicated yesterday that China’s manufacturing may contract for the first time in six months, adding to concern that growth is losing momentum.

MORE...

http://www.bloomberg.com/news/2014-01-24/contagion-spreads-in-emerging-markets-as-crises-grow.html

[Demeter]

2. They managed to starve the economy and drown it in a bathtub

Mission accomplished!

Asses!

[1000words]

3. Does that mean the "recovery" is over?

A booming market meant the economy was "picking up steam." So I'm told ...

[JoePhilly]

4. I remember back in 2009, when the DOW rose from about 6500

to about 8000 or so ... the hair on fire part of DU was SURE, absolutely SURE that was a sign of a double dip recession about to start because the DOW dropped a couple hundred points.

They were wrong. And they were wrong again in 2010, 2011, 2012.

Every year, if the DOW drops from recent highs, they think... "THIS IS IT!!!! This is the collpase we've been waiting for!"

So since 2009, the DOW has gone from about 6500, to about 16,000 today. And folks stil get worked up if the DOW falls a couple hundred points.

For comparison, and a little perspective, the DOW was at about 14,800 back September.

[1000words]

5. Two of my neighbors lost their jobs last week

My brother-in law, lost his in October.

I couldn't give a shit what the stock market is doing, and what could be interpreted from it.

[JoePhilly]

6. I know a guy who just got a promotion ... and

another friend just left his old job for a better one.

Personal anecdotes, are less effective as economic indicators, than almost anything one could think of.

If you don't "give a shit" about (or understand) the market, why comment on it?

[brentspeak]

37. Hey, everyone, look!

Joe Philly "understands" the market. He says he does!

[JoePhilly]

38. Well ...

... better than the person I was responding to.

[lostincalifornia]

8. Actually, according to some the market is a leading indicator. Yes, the economy is still having

issues, and the biggest is those who have been knocked off the job rolls, so they are not even included in the statistics.

This particular problem is due to a supposed slowdown in China, and unrest in the Ukraine. Though we may not like it, we are a global economy. Hell, I was in a layoff at the end of December because our jobs were shipped to Asia. So it is an interesting dichotomy for me, and others. However, there is no way the clock will be turned back now. The problem is we are not on an equal playing field

It would be nice if Congress would work for a jobs bill, or to provide incentives to companies to hire US employees, but I do not see that happening either.

[JDPriestly]

12. In my unprofressional opinion, the recession was to a great extent due to systemic changes

in our society caused by the huge jump in technology that we experienced over the past 15-20 years. We have yet to assimilate the changes.

Its' going to be a long haul. I don't have the solutions, but the problem is that we don't need to pay people to do some of the things we used to need to pay them for.

We've been through this kinds of crises before, and we figured out how to adjust, but it wasn't always easy. Technological advances always force changes in societies. There will be winner nations and loser nations. Whether we win or lose depends on how flexibly we meet this challenge. I sure hope we can be realistic enough to be among the winners.

[fasttense]

20. Oh those systemic changes that cause a capitalist economy to turn to mush every so often.

They seem to occur regularly. So what's wrong with capitalism that makes it so vulnerable to change and makes us suffer so much misery every few years? It seems like a bad system to me. Why don't we get a new economic system? There are many more out there.

[JDPriestly]

23. What's wrong, but also what's right with capitalism in that it fosters so much positive

technological development?

It isn't that capitalism makes us vulnerable to change and therefore causes us to suffer misery.

Capitalism's strength is that it encourages scientific and technological discoveries. It rewards them.

The problem is that as a society we don't recognize that the very strength of capitalism is its biggest weakness. While capitalism encourages scientific and technological discovery and dissemination, it does not, without societal organization and effort, provide a way to spread the costs and benefits of the economic upheavals that result from those discoveries and the dissemination of new technology and scientific developments across the population.

Capitalism relies on markets, but the markets are subject to drastic and sudden change that leaves many people without a booth in the marketplace or a role in society.

Further, we have not yet dealt with the damage to our physical environment that the creative and free and very positive side-effects of capitalism mean.

It is a matter of achieving the public consensus to regulate capitalism in a way that does not destroy its creative potential. It isn't a new economic system exactly. It is approaching capitalism with more common sense and more respect for democratic, socially nurturing policies.

That is my opinion.

[lostincalifornia]

30. Yes, for some that is definitely the case, but for those in high tech, when you hear CEOs and other

say we don't have the software engineers, that is bull. There a plenty of software engineers, it is just that they cannot compete on the same wage scale as in Asia. It is also an excuse for congress to allow more work visas I believe

[1StrongBlackMan]

15. While I agree ...

there is little connect between the DOW and the real economy ... what JoePhiily said.

[melm00se]

17. the stock market is

one of many metrics that indicates the overall health (or sickness) in the economy.

Regardless of the amount of focus put on the stock market, it, in and of itself, is not a sole indicator of the status of the economy.

Additionally, the stock market, contrary to some of the perception of people here at DU, has many "regular" people investors in it. Some directly and some indirectly so how the market goes can have an impact upon their current financial situation as well as their future.

- Pensions invest in the stock market.
- 401k, 403b, 401a investors have investments in the stock market.
- IRA holders have investments in the stock market.

there is a micro view and a macro view of the economy. You post indicates that you are taking a micro view of the economy (and there is nothing wrong with that - it can and does serve a purpose), the stock market (taken as a whole) is a macro economic indicator. Both influence each other.

[lostincalifornia]

31. Actually I believe because of all the black pools, and manipulations, they have pretty much killed

the small investor. Just look at the volume.

No question about it, through IRAs, 401ks via mutual funds, rtfs etc. that is where much of the small investors are, but if you look at the stats where they say most people over 50 have on average less than 100K in their retirement accounts

[1StrongBlackMan]

14. Might that be ...

because folks listen to too many "investment advisors" that make their money shorting the U.S. economy?

[Frustratedlady]

19. The real cause is I got back into the market two days ago...

after sitting in a safe place when the Republicans shut down the govt.

If you ever want to know when the market is going to take a dive, ask. I rarely fail.

[lostincalifornia]

32. Damn, I knew there was a specialist assigned to Frustratedlady just waiting to take the market in

the opposite direction based on your entrance or exit

[Frustratedlady]

34. You have to see my track record to understand.

**** happens.

[ctsnowman]

11. Just the

rich moving their money around while the rest of us get screwed.

[Amonester]

18. When all the benefits land in the same tax-haven locations and just freeze there...

... what else any realistic expert should expect?

[Todays_Illusion]

7. This is a loser as a scare mongering topic when less than 20% of U.S. individuals invested

the stock market. No one much cares about the rich and their little cash flow problems.

[godevil10]

25. As others here, in this thread, have pointrd out

you seem to have a very weak grasp on who is invested in the "Market."

[Todays_Illusion]

29. And your information is out of date. Here is a Gallup, (very conservative since 1988) an another

source on just who that bottom non stock, non mutual fund owning group is, you only have to look at income distribution.
Gallup is showing the best possible face, count on it.

http://www.gallup.com/poll/147206/Stock-Market-Investments-Lowest-1999.aspx

And this scholarly research. I think something more than 50% of U.S. income filers are unde $35K per year. That does not leave much for investing in the stock market.

http://www2.ucsc.edu/whorulesamerica/power/wealth.html

ps, your comment snark is noted.

[godevil10]

35. No sir. Your information is far from

being complete and all inclusive as it does not contain, as near as I can tell, the percentage of people who have investments through workplace retirement accounts such as teachers, police, firemen, and other local and state public service workers, unions, federal employees etc and even people who just may have a checking, or savings account that pays interest. All of that is, in one way or another "in the market," not put under a mattress.

Moreover, the gallup poll, unless I read it wrong, points out that 54% of people have direct investments in the "market." That is 34% higher than the number that Today's Illusion made reference to.

ps, your attempt at chastisement is likewise noted.

[WhoWoodaKnew]

9. This is called a pullback. 2013 was a hell of a year for traders/investors.

[Myrina]

10. Sure, let it fall on Friday and buy low on Monday morning ...

n/t

[1StrongBlackMan]

13. Notice how the article ...

fails to mention that even with the fall ... the market will still end up above 15,500. Remind me again where the market was in December 2008?

[OKNancy]

16. Everytime something like this happens, asshole remark that they don't care, or

who cares about rich people.
Many, many non-rich have their retirement accounts in the market.
Mine are in mutual funds. So it does hurt "the little people" when the market falls.
It also hurts YOU.

It will go back up however, it always does. My little nest egg has done pretty good because I didn't panic.
....and lol I anticipated this so a month ago I took out some bucks to augment my Social Security.
By the time I need more, it will have gone back up.

[Maeve]

21. Oh, there you go...

talking sense! (Hi, Nancy!) The numbers look big, but the percentages--not so much.
While I would disagree with the "it always goes back up" sentiment in the short run (we got burned a decade ago with some investments that weren't properly balanced and have changed investors for our IRA funds), in the long run, it's a safe attitude. And while we invest, we are by no means "rich"--we just put money away for retirement over the past 30 years and the market pays better than the bank.

[fasttense]

22. My, your timing is impeccable

Pity the poor man who can't understand the ups and downs of capitalism and expects to get his retirement money out of the system when it is on a downhill slide.

There is a much better way to save for retirement without gambling on a bunch of rich people NOT leaving the market and leaving you holding the bag.

There is a better economic system that does NOT put an aging population's retirement at risk.

[OKNancy]

27. I didn't take it all out

just a little. I take out some every month to help meet our bills.
This time however, I took out 5 months worth at one time.

[1000words]

24. How is your investing in institutionalized fraud helping?

Glad you got yours, btw.

[OKNancy]

26. My husband is a housepainter for god's sake

Everyone has to do what is right for their own security. The 25% return I got last year was pretty damn good.
We planned our retirement by a lot of sacrifice.
Hell, I shop at Walmart sometimes too.
But just keep on judging as so many around here do.

[1000words]

28. You have every right to your financial planning ...

But don't expect to make a post like you did, and not receive some feedback.

[lostincalifornia]

33. If you are well diversified, and in quality equities you are most likely ok, but your statement that

it will go back up, may or may not apply. We came extremely close to a total meltdown in 2000. It was so close to becoming another great depression, and if certain forces, that called for no bailout, or let them all fall would have happened, I suspect we would still be at the lows trying to recover. In fact paulson, along with the idiot CEO from Lehman did that by letting Lehman go under, and that would have cause major ripples if they hadn't stopped it. Goldman, JPMorgan, Citi, BAC, AIG, all the big boys were on the verge of collapse, and they were able to stop it just on the brink.

Everyone would have been hurt if that collapse had happened.

Incidently, it took over 10 years for the market to START to recover during the great depression, and it didn't fully recover until WWII

A lot of people can't wait that long. We are just damn lucky we had Bernake, and not some fool like a ron or rand paul. It still amazes me that those idiots have such a following

[magical thyme]

36. It was due for a correction. The mutual fund company I support had some equity funds

that grew 30+% in 2013. That can't continue ad infinitum.

I've noticed since the end of the year and the last couple weeks, an influx of naive new "investors" putting their money into the highest performing funds. I figured we were reaching a peak, and that sealed it for me. So I've been waiting for the inevitable correction.