Wall Street's rock-solid quarter ends with a loss

Today we saw the Dow drop almost 70 points right away and with some up and down end up almost exactly the same way by close.  Despite much good news including the S&P having a very strong Q1, with the latter index expected to have a 10.1 percent Q1 increase, there is concern that the market can live up to this.  Given that the S&P is trading at 18 times earnings, investors need to see evidence that this can be sustained so all eyes will be on Q1.  That means a lot anticipation in the coming weeks and volumes continuing below average, as happened today with 6.4 billion shares traded.

Wall Street rises, aided by growth data; Nasdaq ends at record

Today seemed to be the reverse of the great Trump Slump as instead of diving out the gate and then recovering, the Dow shot up over a hundred points out the gate and gradually lost ground throughout the session to close 69 points up.  The surge is credited to an unexpected report showing that the recent glowing economic data turned out to be more glowing than they thought, that Q4 GDP increased 2.1 percent instead of the 1.9 percent previously stated.  This provided investors with further affirmation that the economy was on the right path, not at all hurt by the fact that the good news is global.  Wall Street is now hoping Q1 earnings continues to affirm more.  Volume remains below average at 6 billion.

Energy, consumer shares lift S&P 500 to slight gain

This so-called Trump Correction (or Trump Slump depending on who you talk to) has had a fairly consistent pattern.  The indexes crash big time early in the session only to recover later on to show either a very modest gain or loss, indicating that most investors remain highly confident given the influx of positive fundamentals and are simply taking advantage of these almost daily valleys to use as buying opportunities.  After yesterday’s rather huge rally, that’s what happened again today, a correction that was all primed and ready to be sure.  The Dow is down 9 out of 10 sessions now but it’s still way over 20,000 so there’s no particular concern.  Given yesterday’s confidence ratings, it was no surprise that there was a rally today in consumer and energy stocks.  But concern remains that the post-election rally may be peaking and the S&P selling at 18 times earnings is a good indicator that corrections will continue.  Volume was considerably below average at 5.8 billion so many investors remain on the fence looking for more clarity from Trump.

Wall Street posts sharp gains, fueled by strong consumer data

With three whole days to ponder the next move, investors overwhelmingly took a “glass half full” position today after reports were released generally declaring March to be a glowing month for many economic indicators.  Most noteworthy among these was the data showing consumer confidence at a 16 year high, definitely leading credence to the sentiment that the market is on the right track and still has lots of legs.  The result was a steady day-long rise to peak just before close at more than a 200 point gain in the Dow, which then settled down in the last minutes to close at +150.  So, as was noted yesterday, the market has proven remarkably resilient in light of Friday’s defeat of healthcare, investors already shrugging it off in favor of a focus on tax reform.  Volume however remains below average at 6.6 billion.

Wall Street off as Trump agenda weighed; Dow down for eighth day

It seems the Trump defeat Friday lead to neither the hoped for rally nor the dreaded crash. Instead, as investors can sometimes be, the market proved remarkably flexible.  Whereas throughout the last two months and until Thursday, a defeat of healthcare was assumed to mean that tax reform would never get passed, now Wall Street’s instant new attitude is that Trumpcare’s demise will now make tax reform easier.  These folks are adaptable are they not?  But it was not all roses today.  Right out the gate the index crashed almost 200 points.  And as happened at least twice last week, it came back to close just 45 points down.  In other words, this news is all being taken in stride or, as one expert put it so succinctly today, “It’s just incredible what type of short-term memory this U.S. market has and the buying appetite global investors have for the U.S. market.”  This was also reflected in the below average volume of 6.3 billion shares. 

Succinct Summation of Week’s Events 3.24.17

What a week it was, this time the negatives outweighing the positives (not counting the really big positive or negative depending on which way your politics tilt, an event that did not make this list for obvious reasons.)  For this Sunday night I will share tonight's presentation on "60 Minutes," an excellent segment showcasing a teacher in an impoverished Mississippi elementary school who uses chess to teach his underachieving students how to excel.  We need more of this in all of our schools, a lot more of it!  Hope everyone had a great weekend.

Hybrid Investing

In my Saturday post, I ordinarily offer up a pearl of wisdom or two from Barry Ritholtz's finance column, "The Big Picture," as featured in The Washington Post and the Wall Street Journal.  Tonight however I offer this terrific program, courtesy of PBS and Consuela Mack's WealthTrack series, on behavioral finance and one expert's take on why so many smart people make so many dumb decisions when it comes to their investments.

Wall Street dips in dramatic session as health bill pulled

Fri, 3-24-17

The Dow was down almost 200 points until 3:30 p.m. when the announcement came that the health bill was being pulled, then suddenly rebounded dramatically to close only 60 points down.  So evidently Wall Street was quite happy about this issue finally receiving closure and, though the sentiment had been quite strong that failing in healthcare would be a sad harbinger of things to come, investors quickly changed their tune and now see it in the positive light of freeing the administration up for pursuing tax reform.  Strange how quickly emotions can turn in this market.  But as one expert said today, “Equity markets are going to have to factor in a degree of dysfunction that investors were hoping they wouldn’t have to.”  Really!  They are just now figuring out that we are in a dysfunctional environment?  Let’s hope that kind of ill-fated optimism gets corrected.  Meanwhile the markets have only had a very short time to react to this new development so the real news will likely come Monday as was reflected in the below average volume.  Will Monday see another big rally or a sell off?  Stay tuned.

Wall Street down; lawmakers delay vote on Trump healthcare bill

Yesterday everyone was saying that today was going to be the day, the day that would define Trump’s presidency.  It would be the day that would either launch his legislative agenda and make him unstoppable, or the day that would prove his incompetence and stop him in his tracks but good, depending on to whom you were listening, both sides being equally confident in the outcome.  So why did it not surprise me one bit that neither outcome took place?  This was certainly reflected in the below average volume of 6.4 billion and the fact that the needle moved nary a hair when it became obvious there would be no new news today.  Perhaps tomorrow.  Now the predictions are that if Trump has a good day on Friday, there will be a huge rally; if not, an equally huge crash.  Why do I suspect neither will happen?  Stay tuned. 

Choppy day on Wall Street; all eyes on Trump and healthcare

‘Twas another wild ride today as investors struggle to get a fix on how to take Mr. Trump’s temperature.  Does he actually know what’s he doing or is he burning up with fever?  These uncertainties led the Dow to another big over 100 point drop in the early session, but later recovered to close just six points down.  Tomorrow’s the big day which many believe will determine whether the new president is a real leader or is about to become a lame duck just two months in.  Also not sitting well is the latest oil report showing inventories rising faster than expected, and the ever present thorn in the market’s side that we’re paying $18.10 to make $1 in earnings on stocks, a very high price.  6.9 billion shares traded keeping volume in line with recent averages.

Wall Street sinks on fears of delays to Trump tax cuts

Today was the day Wall Street ran out of patience since, with expectations that Trumpcare will go down in defeat later this week, there are now even greater expectations that tax reform and other economic policies will also not come to pass, not for a good while anyway.  Even the President’s most ardent supporters are now looking at their pocketbooks and having a hard time defending the status quo in the face of all the distractions.  Thus began a sell off that brought the Dow down a very big 237 points, the biggest one-day drop since before the election.  It is not helping matters that Trump is insistent that the new healthcare bill must pass before he will get to taxes.  To be completely fair though, it is also not helping matters at all that the S&P is currently valued at 18 times earnings when it should be at 15.  Thus, everyone is bracing for an overdue correction.  Raw nerves have sent the VIX up a substantial 10% and this same anxiety is reflected in the way above average volume of 8.3 billion shares.

Wall Street drifts lower; investors worry about tax-cut delay

Investors continue to sit on the fence worried that Trump’s distractions over the wiretaps, healthcare, fence-building, travel bans, et. al. may end up jeopardizing the tax cuts and economic policy.  There is also notable concern over lack of clarity in all of the above, all conspiring to keep volume low, momentum mild, and the Dow down a trifling 8 points.  At some point, Wall Street will be insisting on results on the campaign promises or this is all going to reverse itself.  At 5.8 billion shares, trading was way below average. 

Succinct Summation of Weeks Events 3.17.17

For once the week's succinct summary contains a lot more positives than negatives.  For this Sunday I will share the latest entry, posted Thursday, of Consuela Mack's WealthTrack series on PBS.  This particular segment is on our very favorite topic - behavioral finance - and focuses on how investor psychology caused so many smart people to completely miss the boat on some of the best performing mutual funds of the past ten years.  See the discussion after the summary and there's a link directly  below to the web site where the program may be found, though it probably won't be posted for another week or so, as these things go.  Hope everyone had a great weekend.

What’s Your Narrative?

Below please find Barry Ritholtz St. Paddy's Day column in which he offers a different perspective on the so-called post-election Trump rally, suggesting that the forces behind it are very different from what most investors think.  Food for thought and certainly a rationale rooted solidly in sound economic fundamentals.  And it's a short read with a couple of telling graphs to boot.  Hope everyone's enjoying the weekend.  At least the temps are finally going up.

Wall St. flat as banks, Amgen weigh; Adobe rallies

For the second consecutive day the markets appeared to be still taking a breather but what was actually going on was a great deal of sector swapping selling weak areas and buying into more conservative positions, almost a wash nudging the Dow down ever so slightly about 20 points.  Investors continue to take pause on Trump’s apparent inability to stay focused on his promised economic and tax reforms, now being seen as sidetracked on what many consider a futile campaign to undo Obamacare.  There is still a good deal of fence sitting as the new administration is closely watched since the big rally that has rocketed the market since the election has been driven mostly on the hopes of all the promised economic reforms.  If these fail to happen, everyone will be prepared to sell in a hurry.  Keep those stop-losses in place.  All the swapping was reflected in the considerably above average volume of 9.7 billion shares.

Wall Street slips with healthcare stocks, Nasdaq flat

After yesterday’s big boost the market took a breather today with nothing particularly exciting going on, the only damper being Trump’s proposed budget casting doubts on the whole healthcare sector bringing that index down almost a full percentage point and dragging the Dow down mildly 15 points.  The mystery today’s investors grappled with is “he’s proposing to cut the budget of the FDA, which could make it more difficult to get expedited approvals.”  But healthcare has been one of the year’s better performing sectors so it was time to take some profits.  Volume was a little below average at 6.6 billion.

Wall St. up as Fed raises rates but stays course

What a difference between two different reporters on today’s rate hike from the Fed.  Huffington Post put a negative spin on it saying Yellen remarked the economy was on unsure footing and that’s why there was no timetable on future hikes today.  In contrast, Reuters had the good news quoting Yellen that this historic bull market still had legs and that’s why there was no timetable.  Investors took to this latter spin and rocked the Dow up a substantial 112 points (140 really until almost close).  Wall Street was encouraged by the lack of hawkishness, while the mainstream media took it as bad news.  The objective bad news was the retail sector having its worst gain in six months, which is expected to lead to a smaller than expected Q1 GDP.  But investors were pleased as reflected in the above average volume of nearly 8 billion shares traded. 

Janet Yellen just made an unsettling admission about the economy - AOL News

Energy drags on Wall St. as oil falls further; airlines slide

A wild ride today as the Dow crashed over a hundred points right out the gate, then came back to break-even by mid-session only to lose it all again and finally recover to a 44 point loss at close.  A combo of the blizzard hitting airlines stocks and OPEC once again declaring an oil glut made investors a little nervous about their next move.  The CBO report that 14 million Americans will lose under the Republican health care plan didn’t help health insurance stocks one bit either.  But trading was light, the 6.2 billion shares traded below average.

Wall Street drifts with eyes on Fed; Intel drops

On a day of light trading not much happened as investors sit on the fence waiting for the Fed’s decision on interest rates come Wednesday.  Thus, the Dow budged ever so slightly down 21 points with the VIX finally settling down a little bit too.  The odds of the rate hike are now priced at 94%, up from 92 yesterday and 44 early last week.  Volume was below average at 6.2 billion.

Succinct Summation for the Week of 3.10.17 (plus the stars)

It's that time of the week again to summarize all the good news from last week that will lead to this week's almost certain interest rate hike.  So next week's summation should be quite interesting.  I haven't supplied a Sunday night bonus for a while but Barry Ritholtz's weekend reading list included this terrific pictorial of our Milky Way galaxy.  (Who says financial reading is boring?)  If you look closely, you will see a yellow highlighted label almost dead center in our galaxy.  That's us!  Hope everyone had a great weekend and be careful driving in the snow tomorrow.  It's been a while since we've had to do that.  I hope we haven't forgotten how.

No, the Bull Market is Not 8 Years Old

It's that time of the week again for some "light" reading.  Well, maybe not light per se, but certainly very interesting depending on how passionate we are on this whole field of investments.  Today I was struck by this column by our friend and guru Barry Ritholtz as he offers a very different perspective on the definition of a bull market and some supplemental education on some basic concepts.  Lately, I've been rereading all of the Fast Track materials from the last seven years and I found that Charlie Munger is one of the experts we've studied, his name being exhorted once again in this article. Hope everyone gets something out of it and that you're at least trying to enjoy this very cold weekend.

Wall Street ends up; jobs data points to economic strength

Expected job growth for February was 190,000.  The actual number that came in today was a whopping 235,000 once again adding support to the position that the economy is on solid ground and raising the odds of a rate hike next week to now 92%, up from 90% yesterday and 44% just last week.  Since investors were expecting a good number, the Dow rallied only modestly at 44 points.  And even though valuations are considered to be stretched, as long as economic data continues to be positive there is no reason to do anything but keep buying on any little trough.  The 6.9 billion share volume was in line with recent averages.

Wall Street ends up slightly; energy shares rebound

Evidently what goes down must come back up, even when the fundamentals don’t support it.  So even though nothing has changed in the oil markets since yesterday, the fact that energy had its worst day in six months meant that maybe investors overreacted to the news of the oversupply in inventory.  The bounce back may have also been somewhat celebratory as today is the 8^th anniversary of the second longest bull market in history.  Yet all this good news could not stop a 130 point slide in the Dow that only corrected itself in the final hour to come back 2 points up.  Is this really consolidation or it is more nerves?  More good news from the unemployment and hiring front with tomorrow’s report expected to add nearly 200,000 new jobs.  The odds of a rate hike next week have now been raised from 85 to 90%, remarkable since it was only 44% early last week.  For the second day, volume is back to normal with the 7 billion shares traded matching recent averages. 

Dow, S&P 500 dip as energy shares tumble

It’s an old tune.  One day oil inventories are reassessed and determined to be lower than thought – and energy stocks go up.  On another day, they decide that we have more crude in the stockpiles than had originally been estimated – and energy stocks go down.  That’s what happened today, bringing the Dow down 69 points.  This has been occurring with frequency in the last couple of years.  Is counting barrels really that complicated?  So crude dropped more than 5 percent and that brought the energy index to its worst drop in six months.  It completely upstaged the stellar private sector jobs report that added more than 50% more jobs than expected.  The markets remain close to record highs but this will only last if and when the Trump administration produces results and the lack of policy detail has investors acting a bit bipolar.  At 7 billion shares traded, volume was back to normal averages again.

Pharma, bank stocks pull Wall Street lower

Once again, another Trump tweet, this time regarding drug prices, got the markets nervous and brought down the pharma index giving it its worst performance in six weeks.  The long awaited new Republican ACA replacement, this one unpopular even with their fellow Republicans, didn’t help either.  So healthcare was the theme of the day and brought the Dow down a modest 30 points.  The oddsmakers continue to cite an 85% probability that the Fed will raise rates ¼% at its meeting next week.  Volume remains on the tepid side at just 6.4 billion, once again indicative that today’s negative news didn’t really cause much concern.   

Wall Street slips on wiretap accusation, geopolitical worries

It seems between Trump’s latest 3 a.m. tweet rants about bugs planted in Trump Tower and Korea’s latest missile tests, investors have gotten nervous again about the President’s ability to stay on message.  The VIX “fear gauge” rose for the first time in four days and the Dow dipped mildly once again, this time 51 points.  But the S&P still trades at 18 times expected earnings and the 6.2 billion volume is well below average, so Wall Street isn’t too nervous … yet.  

Succinct Summation of Week’s Events 3.3.17

It's that time of week again for the traditional succinct summation with new record highs all around and jobless claims down sharply. How long can we stay above 21,000?  Next week may tell the tale.  Hope everyone enjoyed their weekend.  

10 Weekend Reads - 3/4/17

Per my usual Saturday nights, I again offer an intriguing reading list from our benefactor Barry Ritholtz.  This week's syllabus includes everything from French Impressionist art to a Columbia Journalism Review essay on how to fix the media.  This is what I love about finance -- there is absolutely nothing that is not relevant.  Studying is never a waste of time.  Please also note the very instructive graphic following that so neatly illustrates the past 156 year history of economic expansions.  Hope everyone is enjoying the weekend.  

Wall Street steady after Yellen signals rate hike this month

The whisper-thin 3 point bump in the Dow disguises today’s wild ride where the index lost almost 90 points early in the session and recovered to just about break-even by close.  So the “Wall Street steady” headline is not exactly accurate.  The good news is that there doesn’t seem to be anything but good news out there.  A Fed rate hike in the next two weeks now seems all but a done deal but there is now so much confidence that the stock market and economy in general can handle it that no one cares anymore.  This is quite a contrast from a year ago when even the slightest hint of a hike would send the markets reeling in horror.  The labor report due March 10^th is not expected to dampen this enthusiasm.  The odds makers have now elevated the likelihood of a hike from 44 percent earlier this week to 74 percent yesterday to 85 percent today.  Volume of 6.7 billion was just a little below recent averages. 

Wall Street retreats after surge; Caterpillar, financials fall

After yesterday’s enormous rally, it shouldn’t be at all surprising that today was greeted with a correction as investors wisely took profits sending the Dow down a reasonable 112 points but still just barely over the 21,000 mark.  Yellen will be speaking tomorrow so, with the expectations of a March rate hike going just this week from 44% to 74% today, chances are there will be another little boost after that.  Volume was above average at 7.4 billion. 

Dow pierces 21,000 after Trump speech, rate-hike chatter

Yesterday’s prognosticators predicted that last night’s speech would be very low on specifics and that investors wouldn’t care as long as it was very high on hope and optimism.  They were right.  The speech was very short on specifics and the markets were so bothered that re-energized investors went on a buying spree this morning pushing the Dow way up right out the gate and it pretty much stayed there all day closing with a huge 303 point gain and putting the index well past the 21,000 mark for the first time.  Welcome was the shift to a kinder and gentler Trump and a return to an era of good feelings.  The Fed helped too with remarks that a rate hike was likely coming in just two more weeks, a development that investors have taken as yet another sign of optimism that the Fed feels confident in the economy.  The manufacturing index was also reported at its highest since 2014.  The abundance of confidence and optimism also boosted volume to over 8 billion, way above the 6.9 billion average of recent weeks.