Dow plunges again, this time 514

Another brutal day in the stock market is becoming routine as the Dow looks like it wants to test recent lows. Not sure how many times I said that before, only the numbers were different (i.e. higher):


Dow Jones Industrials --- 2 weeks





Dow sank 514, decliners over advancers 5-1 & NAZ dropped another 81. The markets sold off badly in the last couple hours, maybe the hedge funds guys are back selling again! However, this time there was buying in the last 20 mins which limited the severity of the loss for the Dow to "only" 500. The S&P 500 FINANCIALS INDEX dropped 15 to 196 approaching the 184 low reached just a couple of weeks ago. The Alerian MLP Index was down 5 to 213, giving back some of its big gains in the last couple of weeks. Junk bond funds (with yields well over 15%) sold off, but they sell off on any excuse.

The Dow Jones REIT dropped 13, that's 8%, into 5 year low territory. Many REIT yields are well into double digits in an environment where all dividends are under suspicious. This brings buying opportunities for those who think locking up high yields for the long term will make for great investments as they did at the start of this decade. Simon Property (SPG), one of the largest & best run REITs, has fallen in half from its peak last year, bringing its relatively "modest" yield to over 6%:


Dow Jones REIT Index --- 5 years






And oil continues to sink to new lows. If there is a prime mover, it's about being in a global slowdown & a long recession. In Asian trading, they keep bringing up the concept of demand destruction (high prices destroying demand). I guess they feel this is sort of payback time for those high prices in the summer:

CLZ08.NYM

Crude Oil Dec 08

....66.82

.... 5.36 .... (7.4%)

As an aside, gold plunged 45 to 721, a 14 month low. The world economy has big problems & bank fixes are nice but not solving fundamental problems.

In this atmosphere of confusion & fright, there is strong demand for T-bills where the annualized rate of interest for the 90 day T-bill is only 1%. This represents another use for proceeds from stock sales. Earnings continue to be center stage & the messages are not encouraging. Markets are bleeding & today's actions show with these dreary earnings reports there be more bleeding.