The NASDAQ snapping out of its four-day losing streak, added .82 percent, the DJIA and the S&P500 also advanced, leaving behind their losses the day before. This seesaw of up-and-down is the 149th in the 1,080 trading days of the current expansion, accounting for 14 percent of the total. Yet that rate lags the 20 percent rate of the 2007/2009 bear market as well as the 18 percent of the previous, 2007/2009, expansion.
Nevertheless, this daily volatility exceeds by far the up-and-down oscillations between 1950 and 1995: that earlier time saw these daily direction changes just 5 percent of the time.
Though prices moved higher today, they still lag substantially the closing prices of last week and last month. Such drastic declines motivated the presidents of two regional Federal Reserve Banks to declare that the Fed’s change in policy –of higher future interest rate- is not imminent.
That reassurance, though, flies in the face of reality: the Ten Year Treasury rate has jumped from 2 percent to 2.59 percent since the beginning of June.
Today’s diagram reveals the substantial impact of this escalation on stock prices. It shows, moreover, the close parallel between the S&P500 and the daily change in the value of the Ten Year Treasury paper. (Note that the value, or market price, of that debt is the inverse of its interest rate.)
Yet there is favorable news for stock prices: if this, since the beginning of the month, relationship, and lag persists, expect to see a stock market rally, as the S&P500 follows a moderation in the Fed’s interest rate escalation.
DJIA .69 percent
NASDAQ .82 percent
S&P500 .95 percent
