Market Fears begin to steepen.
Fears have been starting to become entrenched in the investor psyche about a market crash. However this has been going on for a year and may just be another momentary jitter. U.S. stocks have faded further with a slump in oil prices. In addition, the bond market has been showing signs that are oddly reminiscent of 2012 and may indicate an economy that still needs support to keep it going. This possibility has made some investors a little nervous and a little lost.
Though there were some great performers on Wednesday the S&P 500 dropped in value as of the close on Wednesday. This was caused by the selloff in oil and gas producers that seemed almost unstoppable. This selloff will likely continue and exacerbate the bond market impact upon the S&P 500.
Though there was a 0.36% increase in the NASDAQ caused by a rally in Apple Inc (NASDAQ: AAPL). up to a five year high ; though this has done little to quell most investor’s fears. Both the S&P as well as the DOW JONES IND fell by at least 0.18% and 0.06% over the two day period. The one month period shows a fall in the NASDAQ, DOW JONES IND AVG and the S&P 500 by 1.13%, 2.67% as well as 2.92% respectively.
Overall the markets are in a mild sell off as investors are losing patience in the policy makers to boost inflation. Investors are very much aware that there is a limit to quantitative easing and that it must come soon. The question however is ‘How soon?’
Some individuals are saying that it should be sooner rather than later when considering the end of quantitative easing, yet there are some who fervently disagree. And this only compounds the commodities induced fall in the markets.
The worst performers as of Wednesday 4pm were raw material producers, phone stocks and consumer staples. This is an indication of weak demand overall.
Data on U.S. government inventories also show that demand is weakening. On Wednesday data showed a surprise drop in inventories of distillate and other products.
Treasuries yield fell three basis points (0.03%) as well. This erased a six basis points gain at midday on Tuesday. Treasuries yields are in free fall overall. The last time they have fallen this much was in August of 2012 where investors were getting rid of long term bonds in a Federal Reserve buy back. When looking at this in the context of a Federal Reserve bond issuance on Tuesday of $12 billion, the steep in bond yields is concerning.