Stock Market Rout Spreads Investors' Fear [View all]

[louis c]

This discussion thread was locked as off-topic by muriel_volestrangler (a host of the Latest Breaking News forum).

Source: Wall Street Journal



Feb. 4, 2018 7:00 a.m. ET

U.S. stocks last week suffered their largest weekly drop in two years. But some investors worry that falling prices for things like oil futures, gold and bitcoin are offering a more ominous signal that could presage deeper declines.

The broad selloff that featured Friday’s 666-point tumble in the Dow Industrials marked a sharp reversal from the broad-based advance of the past year. Many stock-market indexes have hit fresh records or recent highs. The Dow is still up 27% over the past year, while emerging-market currencies, high-yield bond prices and commodities like copper and gold have likewise risen.

Signs that global growth is picking up while interest rates remain below historical norms has helped propel a broad gains in so-called risky assets. That widespread rally resulted in the average correlation between oil, stocks, bond yields and the euro reaching its highest level in 5½ years, a Deutsche Bank analysis showed.

Even before Friday’s stock rout, many global investors had grown uneasy about various assets moving in lockstep—especially because trading in many of these markets isn’t typically tied to share prices. Such closely correlated movements are often associated with turning


Read more: https://www.wsj.com/articles/as-stock-market-rout-spreads-investors-fear-markets-falling-in-lockstep-1517745600