Dow Drops 118 Points Because Friday's Fears Persist

Michael Haddad

Rocky Road. Stocks are starting the week in the red Monday, as fears about rising yield linger amid fresh concerns from around the globe. Is it time for earning season yet? In today’s Intraday Update, we…

…discuss the persistence of yield worries; …look ahead to third-quarter results; and …see what’s eating Facebook (FB).

Case of the Mondays

Everyone’s had that sinking Monday morning feeling: All of Friday’s problems still remain, and it’s like the weekend never happened. Stocks certainly are behaving that way today, falling amid ongoing worries about higher Treasury yields–yes, bond markets are closed for the Columbus Day holiday, but that doesn’t mean investors have forgotten about last week’s upward move. Then there are new worries from Europe about Italy’s budget and China’s latest attempt to spur its economy.

The Dow Jones Industrial Average lost 118.60 points, or 0.45%, reaching 26,328.45 in recent trading, while the S&P 500 slipped 0.5% and the Nasdaq Composite fell 1.2%.

Piper Jaffray’s Craig Johnson reiterated a cautious near-term outlook for U.S. stocks, “as cracks continue to emerge within our technical research. Breadth, momentum, and leadership are all deteriorating while yields recently witnessed major breakouts to multiyear highs.” While stocks have bucked most seasonality trends this year, including rising during historically downbeat September, and a strong third quarter usually brings a robust end to the year, he nonetheless “cannot help but question if this will be another seasonality trend bucked by the S&P 500 based on the weakening market internals.”

Certainly, risks are on the rise along with yields, although history shows that midterm elections tend to turn up market gains no matter who wins at the polls.

UBS’s Keith Parker writes that the stock selloff has come amid a perfect storm of

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