Markets had a rough day on Thursday, with the Dow falling more than 300 points and each of major stock indexes giving up all of their gains from yesterday’s huge rally while bond yields fell around the world as the US 10-year Treasury bond fell to its lowest level in 15-months.
First, the scoreboard:
- Dow: 16,659.3, -335, (-2%)
- S&P 500: 1,928.2, -40.7, (-2%)
- Nasdaq: 4,378.3, -90.2, (-2%)
And now, the top stories on Thursday:
1. It was red across the board for the markets on Thursday. The Dow lost more than 300 points and the S&P 500 and Nasdaq lost more than 1.9%, forfeiting all of their gains from Wednesday’s rally. The price of crude oil also fell further, moving below $US86 a barrel for the first time since 2012, as the broader commodity sector continues to get crushed. Precious metals including gold and silver rallied on Thursday, with both gaining more than 1.5%.
2. The sector that came under serious pressure on Thursday was energy stocks, particularly coal stocks, with a number of companies in that sector falling more than 6%. Leading losses for coal stocks was Walter Energy, which lost more than 11%, as that company has seen its market cap fall from more than $US1 billion at the beginning of the year to about $US100 million now, a more than 90% decline.
3. Bond yields around the world fell on Thursday, with the US 10-year Treasury bond falling to 2.28%, its lowest level since June 2013. The 10-year yield fell to its lowest level of the year on Wednesday afternoon after the latest Minutes from the FOMC struck a particularly dovish tone, and extended its rally in early trading on Thursday. Internationally, yields also fell as investors are now getting negative yields from German bonds out to three years, while the Swiss 10-year bond fell to within about 4 basis points, or 0.04%, of its all-time record low of 0.36% touched back in 2012.
4. Speaking on CNBC’s Squawk Box on Thursday morning, hedge fund manager Leon Cooperman said that investors buying bonds right now are “playing with dynamite,” outlining what he saw a reasonable scenario where inflation and real GDP get nominal GDP back to 4%-6%, meaning that the current 2.3% yield on the US 10-year will see investors lose money.
5. Also in the bond world on Thursday, Bill Gross held his first webcast and released his first investment outlook since joining Janus Capital late last month. Gross acknowledged that the last several weeks have been tough both for Janus and PIMCO investors, saying that there have been some “obviously rough seas,” after his much-publicized exit from the firm he founded more than 40 years ago. Gross said that the global economy appears poised for slower growth over a longer period of time, and cautioned that investors in both bonds and stocks should be prepared for lower returns in the future than they have enjoyed in the past.
6. Activist investor Carl Icahn issued an open letter to Apple CEO Tim Cook, in which he reiterated his call that Apple should buyback more stock and argued that Apple shares should be worth $US203. Icahn wrote that the letter was not a critique of the job Cook has done as CEO, but said that the company’s shares are undervalued and that the board should repurchase more stock. Apple responded to Icahn’s letter noting that it has already returned $US74 billion to shareholders this year and plans to return $US130 billion to shareholders by the end of next year.
7. One of the biggest stock moves on Thursday was Lakeland Industries — which makes hazmat suits and has a market cap of just $US60 million — as shares of the company gained more than 50%. Lakeland shares have been going crazy over the last month as the recent Ebola breakout has reached Europe and the US.
8. Tesla is set to reveal the secret product that CEO Elon Musk teased in a tweet not long ago, and Business Insider’s Matt DeBord broke down the three main theories people have been bouncing around as to what the company may unveil tonight. Business Insider will have full coverage of the reveal, which is expected to take place at about 10 pm ET.
9. European Central Bank President Mario Draghi spoke at the Brookings Institute in Washington, D.C. on Thursday, and took a not-so-subtle swipe at Germany, saying that fiscal action is needed to kickstart the European economy, particularly from those countries that can afford to do so. “You decide which country this sentence applies to,” Draghi said.
10. In economic data, the weekly report on initial jobless claims beat expectations, as claims came in at 287,000 as the four-week moving average for initial claims fell to its lowest level since February 2006. “In one line: The downward trend continues; expect strong payrolls in Q4,” wrote Ian Shepherdson at Pantheon Macro following the report. “With the pace of firings exceptionally low, and surveys signaling robust hiring, we have to expect very strong payroll growth in Q4, at least. Claims are unlikely to tall much further, but equally we see no reason to expect a near-term rebound.”