Markets plunge on worries about the global economy and low oil prices

Dow tumbled 358 closing at the lows & below 17K, decliners over advancers more than 5-1 & NAZ pulled back 141 (see below).  The MLP index dropped a very large 6+ to the 351s & the REIT index lost 1+ to below 321.  Junk bond funds slid lower (following 3 months of falling prices) & Treasuries rose sharply, taking the yield on the 10 year Treasury down to 2.08%.  Oil is sloshing around low the 41s & gold extended its rally this month, going above 1150.

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CLV15.NYM

....Crude Oil Oct 15

....41.37

...0.10

(0.2%)

Greek Prime Minister Alexis Tsipras announced he will step down with an eye to snap elections, a move that would strengthen his authority after a party mutiny over his agreement to a 3rd bailout.  “Now the Greek people need to have their say,” Tsipras said.  “With your vote you will show who and how Greece can be led on the difficult but hopeful road in front of us. With your vote you will judge us all.”  After his televised speech, he emerged from his Athens office & walked next door to say he would offer his resignation to the Greek pres.  He used his speech to recite his successes, from negotiating the new aid package to a firmer commitment from euro-area partners to consider debt relief.  He didn’t give a date for the ballot, though a gov official earlier said a vote could be held on Sep 20.  Tsipras, who was elected in Jan on an anti-austerity platform, last week approved sweeping economic overhauls attached to the bailout at the cost of seeing his Syriza party split.  The Greek drama is far from over!

Tsipras Announces His Resignation, Calls for Snap Greek Elections

A handful of stocks that have meant everything to the US equity market in 2015 are leading one of the year’s biggest declines.  Led by a 6% plunge in Netflix (NFLX), companies that have come to be known as the Fab 5 saw $44B in market value erased Thurs, the most since Jun 2014.  Losses in Facebook (FB), Amazon.com (AMZN)., Google (GOOG) & Apple (AAPL) pushed the NAZ 100 down more than 2%, its 4th-biggest decline since Jan.  With market breadth drying up & industries such as energy & commodities producing few winners in 2015, pressure has increased on a handful of megacap technology & consumer stocks to shoulder gains.  Prior to Thurs, rallies in the 5 companies actually exceeded that of the entire S&P this year (on a weighted basis).  Gains in the Fab Five have contributed a total of 30 index points to the benchmark index this year thru Wed, more than the 21 points that the S&P 500 added as a whole.  Those mega-cap companies are now dragging down stocks as signs of a slowing global economy & rising dollar take a toll on large multinationals.

Netflix Sinks

Netflix, the best performer in the S&P 500 this year with a 133% rally, slid 6.9% to below $114, the sharpest decline for the shares since Oct.  The biggest online subscription video service has been climbing amid a 12% plunge in media stocks in the past month.  Today’s loss in AAPL adds to months of pain.  The S&P biggest company erased about $12B in market cap today as the shares slid 2.2%, extending losses to 15% from a high in Feb.  AMZN, FB & GOOG paced declines in the Nasdaq 100, each losing at least 1.9% as the index slid 2.2%.

Netflix Leads 2015's 'Fab Five' to Their Biggest Loss

Mid-Atlantic manufacturers are expanding at a modest pace this month, according to data released today.  The Federal Reserve Bank of Philadelphia said its index of general business activity covering the regional factory sector rose to 8.3 in Aug from 5.7 in Jul.  In Jun, the index surged to 15.2--the best level of the year.  The forecast called for the index to rise to 6.5.  A reading above zero indicates expansion whereas a reading below that level denotes contraction.  The Philadelphia report follows a weak survey released Mon by the NY Fed, which showed manufacturing conditions in the NY region contracted for the 3rd time in 5 months & dropped to the lowest level since the recession.  Some of the Philadelphia Fed's subindices gave up more ground in Aug after slipping in Jul, though most still suggest a continuation of modest expansion.  The new-orders index edged down to 5.8 after it eroded to 7.1 in Jul from 15.2 in Jun.  Pricing power continued to deteriorate.  The prices-received index dropped to -4.9 from 1.7 last month, though the decline came as prices paid also fell.  The prices-paid index declined to 6.2 from 20.2 in Jul.  Meanwhile, demand for labor improved, with the employees index rebounding to 5.3 from -0.4 in Jul & the workweek index jumped to 8.5 from 4.0 last month.  The shipments index surged to 16.7 after it dropped to 4.4 in Jul, taking back the ground it had given up in Jun.  Manufacturers in the region are more optimistic about the next 6 months, according to the report.  The general business expectations index improved to 43.1 from 41.5 last month.  Manufacturers in the region are planning for more capital-expenditures over the next 6 months--the capital-expenditures expectations index jumped to 18.4 from 7.7 in Jul.  However, the expected-employment index dipped to 21.5 from 22.2 in Jul.

Mid-Atlantic Factory Activity Rises

This is a very bad time for the stock market when all news is bad.  Traders do not like to see that.  The root problem is that global growth is slow.  No secret, but that fact is finally sinking in.  China is stuck in neutral & Europe is up slightly at best.  While the US is growing, the data is mediocre & inconsistent.  The latest vibes from the Fed are that Sep will see the first rate hike in years, making traders more edgy.  Dow is down 700 this month & the 17K floor did not hold.  Look out below!!

Dow Jones Inudstrials