Stock market meltdown has to do with a lot more than just Facebook
Bad news for Facebook may have been a catalyst for Monday's market meltdown, but analysts say there are plenty of reasons for selling to continue, not the least of which is an atmosphere of uncertainty being created by the White House.
Fear of a global trade war tops the list of worries sparked by the Trump administration, but analysts also say the personnel shakeups and concern over the ongoing Russia investigation, including whether President Donald Trump will fire the special prosecutor, are also hanging over the market.
On top of that, the economy seems to have lost some oomph. Economists no longer see 3 percent growth forecasts for the current quarter. Recent real estate and retail sales data raise questions about what is going on with the consumer, and there is concern Fed interest rate hikes could slow things down even more.
In the very near term, investors are looking to the Fed for guidance. The Federal Open Market Committee begins a two-day meeting Tuesday and will release new economic and interest rate forecasts Wednesday. The Fed is widely expected to raise rates, but the future course of rate hikes is unclear, and analysts say the reaction in stocks could be negative if the Fed expects more than the three rate hikes it currently forecasts for this year.
"We don't see any reason for an abatement of this market pressure coming on before the Fed. After the Fed, we'll have to see what their message is," said Julian Emanuel, head of equities and derivatives strategy at BTIG. "The [White House] personnel turnover at the margin increases uncertainty, and markets dislike uncertainty. There are so many uncertainties right now —politically, economically, monetarily."
The Dow was down more than 335 points to 24,610, and the S&P 500 was off 1.4 percent to 2,712. The S&P broke below its 50-day moving average at 2,748 and was still about a dozen points above its 100-day moving average, at 2,688.
U.S. interest rates, meanwhile, continued to rise Monday. Typically, Treasury yields fall when stocks sell off, because investors seek safety in the bond market. Instead, the 2-year yield reached a new nine-year high of 2.32 percent early Monday, and the 10-year yield also rose, to around 2.85 percent.
Facebook was the far bigger weight on the market than rising rates, but analysts said Trump also spooked the market. Analysts pointed to a weekend flurry of tweets from the president attacking the integrity of special prosecutor Robert Mueller's investigation.
"Trump is one tweet away from scaring the hell out of the market," said Art Cashin, UBS' director of floor operations.
https://www.cnbc.com/2018/03/19/tech-stock-market-meltdown.html
Bad news for Facebook may have been a catalyst for Monday's market meltdown, but analysts say there are plenty of reasons for selling to continue, not the least of which is an atmosphere of uncertainty being created by the White House.
Fear of a global trade war tops the list of worries sparked by the Trump administration, but analysts also say the personnel shakeups and concern over the ongoing Russia investigation, including whether President Donald Trump will fire the special prosecutor, are also hanging over the market.
On top of that, the economy seems to have lost some oomph. Economists no longer see 3 percent growth forecasts for the current quarter. Recent real estate and retail sales data raise questions about what is going on with the consumer, and there is concern Fed interest rate hikes could slow things down even more.
In the very near term, investors are looking to the Fed for guidance. The Federal Open Market Committee begins a two-day meeting Tuesday and will release new economic and interest rate forecasts Wednesday. The Fed is widely expected to raise rates, but the future course of rate hikes is unclear, and analysts say the reaction in stocks could be negative if the Fed expects more than the three rate hikes it currently forecasts for this year.
"We don't see any reason for an abatement of this market pressure coming on before the Fed. After the Fed, we'll have to see what their message is," said Julian Emanuel, head of equities and derivatives strategy at BTIG. "The [White House] personnel turnover at the margin increases uncertainty, and markets dislike uncertainty. There are so many uncertainties right now —politically, economically, monetarily."
The Dow was down more than 335 points to 24,610, and the S&P 500 was off 1.4 percent to 2,712. The S&P broke below its 50-day moving average at 2,748 and was still about a dozen points above its 100-day moving average, at 2,688.
U.S. interest rates, meanwhile, continued to rise Monday. Typically, Treasury yields fall when stocks sell off, because investors seek safety in the bond market. Instead, the 2-year yield reached a new nine-year high of 2.32 percent early Monday, and the 10-year yield also rose, to around 2.85 percent.
Facebook was the far bigger weight on the market than rising rates, but analysts said Trump also spooked the market. Analysts pointed to a weekend flurry of tweets from the president attacking the integrity of special prosecutor Robert Mueller's investigation.
"Trump is one tweet away from scaring the hell out of the market," said Art Cashin, UBS' director of floor operations.
https://www.cnbc.com/2018/03/19/tech-stock-market-meltdown.html
