Dow suffers biggest point drop in 5 months

marketwatch.com ^ | March 10, 2015 | Anora Mahmudova

[John W]

NEW YORK (MarketWatch) — The Dow Jones Industrial Average suffered its worst one-day point drop in five months as investors began pricing in a rate hike by the Federal Reserve by the middle of the year, while other central banks are embarking on a quantitative easing path.

ECB’s bond purchases sent European government bond yields sharply lower, while euro fell to multiyear lows against the dollar, wreaking havoc on foreign exchange and commodity markets.

Tuesday’s free fall erased 2015 gains for the S&P 500 and Dow industrials, pushing the indexes slightly negative for the year.

The surging dollar hammered commodities, while investors piled into Treasurys, sending yields on the 10-year note down sinking seven basis points to 2.12%.

[Zeneta]

It is ALL about the US Dollar.

I’ve been saying this for a few months now.

The upward move in the Dollar has been significant and will likely continue.

I posted a chart on another FR thread earlier.

http://www.freerepublic.com/focus/news/3266321/posts?page=16#16

Note that between 1997 and up to 2000 the FED had been raising rates. In 2001 they began cutting rates. They cut rates so low that it contributed to the Housing Bubble which blew up in 2007-8.

So, the economy tanked and there is no more room to cut rates so they begin QE. The QE efforts worked to keep the Dollar from going up since a higher Dollar would hurt our US exports. Now that QE has stopped, our Dollar is going up.

They can’t cut rates because we are pretty much at zero now and if they raise rates then the Dollar will REALLY go up, and that will crush the market and virtually all commodities.

Keep in mind that the recent rally in the Dollar is happening as the result of a few things, weakness in the Eurozone, the end of QE and the “hinting” of a rate increase.

If the FED actually raises rates?

The money will flow into the US Dollar so fast your head will spin.

[ExpatGator]

That’s their choice. I have never lost a penny in the market. Never will.

[napscoordinator]

And hopefully they are going to buy more and not get weird and sell cuz the sky is falling. That is one main reason that people end up poor is because they don’t use their heads.

[Zeneta]

In addition.

I would expect the FED to back off talk of a rate increase and possibly “Hint” that they may try another round of QE.

In order to do so they would have to talk down their recent comments about our economy being on the upswing and express concerns.

Take would be enough to SLOW the rising Dollar, but only QE/rate CUT would really stop the rising Dollar. And even that would only be temporary.

Personally, I would like to see another round of QE.

The pain of NOT doing another QE will be much greater than what it would take to get all that cash back.

IMHO, the only way out of this mess is for a massive roll back of regulations and a massive TAX CUT. And those things are not likely to happen under our current administration.

[Zeneta]

There are a lot of people on FR that have caught the Gold Bug and see inflation everywhere. They rightfully see the FED's QE* efforts as inflationary, but the data tells a different story.

The CRB Index is the Commodity Research Bureau's index of major commodities. The index comprises 19 commodities: Aluminum, Cocoa, Coffee, Copper, Corn, Cotton, Crude Oil, Gold, Heating Oil, Lean Hogs, Live Cattle, Natural Gas, Nickel, Orange Juice, Silver, Soybeans, Sugar, Unleaded Gas and Wheat.

[neocon1984]

The Dow is artificially high because there are no other good investments. In addition, companies are buying back stock rather than expanding in this anti-business environment.

There will be a significant correction in the market this year. Diversify your investments, based on your age and expected retirement date. We survived 4 years of Carter. We will survive 8 years of Obama. Four years of Hillary or any other leftist? It may be time to retire overseas.

[Rodamala]

So, what you are saying is:

"WE'RE DOOMED!"

[cuban leaf]

Yes. I see deflation.

Followed by inflation.

Followed by hyper-inflation.

[trebb]

Good. Drop some more. The lower the better for most of us at this point in our lives. I want to buy as much stock for the buck I can. I cry when I see the dow rise and get excited when the dow falls. I would imagine most feel the same way as I do or should.

Wife and I are both retired and I'm all for the crash and having interest rates run back up. Moved much our stuff into safe havens which protect the principle with guaranteed growth (minimum 4.8% with larger is market ends up higher at end of a year), but our savings accounts could use a Carter type malaise...