Dow Plunges into Correction Territory: Here’s How Bad Friday’s Market Bloodbath Was
U.S. stocks closed sharply lower on Friday as slowing growth in China and worries about a possible rate hike by the Fed took their toll. The Dow Jones Industrial Average finished the day down 531 points for a 3.12 percent loss. The S&P lost 65 points (-3.16 percent) — its worst day since Aug. 8, 2011 — and the Nasdaq lost 171 (-3.52 percent). For the first time since 2011, the Dow is now in a correction, meaning it has lost 10 percent from its peak. The S&P is nearing correction territory, too, having lost 7.5 percent since its May 21 closing high.
Related: The Stock Market's Fed Fever Is Only Going to Get Worse
The selloff was widespread, with 491 of the S&P 500 stocks ending the day in the red and only 11 managing to advance (the S&P 500 actually includes 502 stocks). For the week, 487 of the S&P 500 stocks fell and only 15 gained. In total, the S&P 500 lost a collective $1.14 trillion in market value on the week. Yes, trillion with a "T."
This snapshot from finviz of the performance of stocks in the S&P 500 gives a sense of Friday's carnage (Click it to enlarge):
Budget ‘Chaos’ Threatens Army Reset: Retired General
One thing is standing in the way of a major ongoing effort to reset the U.S. Army, writes Carter Ham, a retired four-star general who’s now president and CEO of the Association of the U.S. Army, at Defense One. “The problem is the Washington, D.C., budget quagmire.”
The issue is more than just a matter of funding levels. “What hurts more is the erratic, unreliable and downright harmful federal budget process,” which has forced the Army to plan based on stopgap “continuing resolutions” instead of approved budgets for nine straight fiscal years. “A slowdown in combat-related training, production delays in new weapons, and a postponement of increases in Army troop levels are among the immediate impacts of operating under this ill-named continuing resolution. It’s not continuous and it certainly doesn’t display resolve.”
Pentagon Pushes for Faster F-35 Cost Cuts
The Pentagon has taken over cost-cutting efforts for the F-35 program, which has been plagued by years of cost overruns, production delays and technical problems. The Defense Department rejected a cost-saving plan proposed by contractors including principal manufacturer Lockheed Martin as being too slow to produce substantial savings. Instead, it gave Lockheed a $60 million contract “to pursue further efficiency measures, with more oversight of how the money was spent,” The Wall Street Journal’s Doug Cameron reports. F-35 program leaders “say they want more of the cost-saving effort directed at smaller suppliers that haven’t been pressured enough.” The Pentagon plans to cut the price of the F-35A model used by the Air Force from a recent $94.6 million each to around $80 million by 2020. Overall, the price of developing the F-35 has climbed above $400 billion, with the total program cost now projected at $1.53 trillion. (Wall Street Journal, CNBC)
Chart of the Day - October 6, 2017
Financial performance for insurers in the individual Obamacare markets is improving, driven by higher premiums and slower growth in claims. This suggests that the market is stabilizing. (Kaiser Family Foundation)
Quote of the Day - October 5, 2017
"The train's left the station, and if you're a budget hawk, you were left at the station." -- Rep. Mark Sanford, R-S.C.