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Smackdown! Stocks Crushed; Dow Loses 859 Points, NASDAQ Drops 315

Summary

Dow Down 4 of last 5 days.

NASDAQ worst day since Brexit.

Rout is global.

Stocks were battered on Wednesday as investors fled stocks in droves, sending the Dow to its worst loss in eight months and extending the S&P 500's losing streak to five straight days.

Continue reading at <a href=http://moneydaily.blogspot.com>Money Daily</a>

The Dow suffered its biggest point decline since February 8 (-1,032.89). The NASDAQ's 315-point loss was the largest since the Brexit vote in England on June 23, 2016. Global markets responded the following day with huge losses, the NASDAQ dropping 202 points. Wednesday's decline on the NASDAQ was the third-largest point drop, the 4.08% loss ranks 13th all-time.

Wednesday's sudden collapse was not completely unpredictable. It came exactly two weeks after the Federal Reserve hiked the federal funds rate for the eighth consecutive time, when it's FOMC meeting concluded on September 26. Since then, stocks initially gained, with the Dow making successive all-time highs on October 2nd and 3rd. On the 4th and 5th, however, the direction reversed, with the Industrial Average losing 380 points over those two sessions.

With Wednesday's losses, the Dow has shed 1230 points and futures on Thursday are pointing to more declines.

Markets around the world have been trending lower in recent weeks, with some already in correction territory, most notably, the German DAX, Argentina's MERVAL and the KOSPI of South Korea. England's FTSE has been suffering losses of late and is more than nine percent off recent highs.

Tuesday's post here at Money Daily referenced a market action in 2007 as a comparison to the current condition, noting that in the year preceding the Great Financial Crisis of 2008, the Dow made new highs in quick succession before taking a plunge that lasted a year-and-a-half, finally reversing course in April 2009. A similar set-up occurred recently on the Dow, though the new highs were more compressed.

Large one-day declines are often event-driven. This shellacking can be tied most closely to the September interest rate hikes. With the 10-year note yielding 3.23%, there are few stocks offering that percentage level in dividends, thus, investors seeking to ameliorate risk are selling stocks and buying bonds, which are not subject to the kinds of wild price swings typical in stocks.

When markets open in the US, investors will see that the rout has spread globally. Japan's NIKKEI was down nearly four percent on Thursday. Hong Kong's Hang Seng was down 3.5% and China stocks ripped more than five percent lower.

With closing prices on Wednesday, the Dow Jones Industrial Average has wiped out most of the year's gains. The Dow is up just over 800 points on the year, a gain of less than four percent.

Dow Jones Industrial Average October Scorecard:

Date

Close

Gain/Loss

Cum. G/L

10/1/18

26,651.21

+192.90

+192.90

10/2/18

26,773.94

+122.73

+315.63

10/3/18

26,828.39

+54.45

+370.08

10/4/18

26,627.48

-200.91

+169.17

10/5/18

26,447.05

-180.43

-11.26

10/8/18

26,486.78

+39.73

+28.47

10/9/18

26,430.57

-56.21

-27.74

10/9/18

25,598.74

-831.83

-859.57

At the Close, Wednesday, October 10, 2018:

Dow Jones Industrial Average: 25,598.74, -831.83 (-3.15%)

NASDAQ: 7,422.05, -315.97 (-4.08%)

S&amp;P 500: 2,785.68, -94.66 (-3.29%)

NYSE Composite: 12,622.13, -338.32 (-2.61%)

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.