US stocks sell off sharply, a day after rising sharply yesterday, as yesterday’s rally had no staying power, and the latest soundings on the consumer send disturbing messages.
DJIA falls 250 points, or 2.5%, to 9712, S&P 500 drops 2.8% to 1036 and Nasdaq Comp loses 2.5% to 2045. S&P breaks its seven-month winning streak. Today and yesterday also represented the first time since May that the Dow was up 2% one day, and down 2% the next. Still, the index scratched out a 0.45 point gain on the month, which means it’s been up four months in a row, and seven of the last eight.
Crude loses almost $3, gold falls as dollar strengthens. Readings on consumer sentiment and personal income and spending illustrate a worried consumer.And it’s becoming apparent that corporate profit growth is going to slide for a ninth consecutive quarter.
The S&P 500’s down a little more than 5% in the past week, and looking back, it seems like the long-expected correction has finally arrived. Right now it’s a minor one, but the real question is, will it be just a correction.
The problem for the bulls is there’s still no corporate earnings growth, and there are just too many people out there without jobs. Sure, jobs are a lagging indicator. But they could be lagging so much they drag the whole economy back down into the mud.
Addendum: Some late stats from the Journal’s markets group. The Dow was up or down by more than 100 points in six of the last seven sessions, the first time that’s happened since March 30. It’s also been down by more than 100 points in four of the last six sessions, the first time that’s happened since Jan. 14.
That’s volatility, and it helps explain why the VIX is spiking.
Paul Vigna
October 31, 2009
“Sure, jobs are a lagging indicator”
Most of what I’ve read concerning a balance sheet led recession is that UE is a coincidental indicator. You may want to flesh this out some.