Wall Street slides as healthcare drags but manages monthly gain

Today’s session got started with a bang with the Dow rocketing up nearly 200 points out the gate, but then started an all-day slide that ended with a late afternoon 148 point plunge into the red.  And while the ebullient Q1 earnings had everyone putting inflation and trade wars on the backburner last week, they were front and center today with the day’s sentiment being that a strong Q1 is not good enough.  But many may be selling off due to tariff exemptions expiring tomorrow hedging bets against Trump not extending them.  Again ironically data on income and spending was positive enough to put inflation worries in check.  Volume was a little above average at 6.8 billion. 

Succinct Summation of Week’s Events 4.27.18 (plus American families wealth)

Once again it is time for the weekly summation with the good news being that Q1 continues to go way beyond expectations and we have the lowest jobless claims in many years.  The bad news is a decline in durable goods orders and imports falling while exports rise, thereby shrinking the goods deficit (though I'm not sure why this would be a negative.)  The bonus this week is another informative eye-shot courtesy of Barry Ritholtz's Sunday reading list.  This graphic shows that, as of 2016, American families have reached a new low, that is a new high in terms of percentage of households that have no net worth except for the equity in their homes.  Nearly 1 in 3 families fall into this category, the highest in modern history.  The reading list also includes another interesting contrarian article making the case that climbing deficits aren't necessarily bad.  Hope everyone enjoyed the weekend.  I'm told we're finally going to have real spring weather sometime this week! 

How Stocks Correlate With Higher Interest Rates

There has been a good deal of skepticism perpetrated in the financial media during the last few years about the dangers of rising interest rates and how they might adversely impact the stock market, particularly the current very long running bull market. Of course, popular opinion has it that the bulls have enjoyed their success primarily due to the low interest rate environment of the past ten years.  So for your weekend reading pleasure, I am once again presenting a very good article that takes the position that stocks historically actually benefit from rising interest rates, and very likely will this cycle too.  It's not the first time I've seen this point of view; actually many economists have expressed this same sentiment over the past couple of years.  But given the turmoil in the market this week over the concern regarding rates and inflation, I thought it would bear repeating.

Wall Street flat as earnings offset inflation jitters

It was another day of the market swinging back and forth between green and red but with the Dow closing just 11 down.  Like yesterday, concerns over inflation and trade wars have taken a backseat to Q1, which continues to go considerably above expectations.  There is also renewed confidence that the Fed will continue hiking interest rates, thereby keeping inflation in check, concerns of which have been triggered by the recent trends towards rising wages and corporate costs.  This week has seen more than half of the S&P bringing in Q1 reports, 80 percent of which have beaten forecasts which, in turn, have today raised the overall expectations for Q1 earnings growth to 24.6 percent, 1-1/2 percentage points higher than yesterday, 50 percent higher than a month ago and twice the forecast from January.  Volume was just over 6 billion shares. 

Wall Street gains on strong earnings, tech resurgence

The surge in confidence continued today with an impressive 238 point gain as investors put concerns over inflation and tariffs on the back burner and continue putting their money on big Q1 earnings.  Today: Facebook up 9 percent after beating estimates, AMD up over 13, and Treasuries finally closing below 3 percent.  Amazon up 6, UPS 4, Visa nearly 5 and unemployment claims at their lowest level since 1969 as 45 percent of the S&P has reported with 80 percent beating estimates, enough to once again push the Q1 earning forecast upwards, today to 23 percent.  That’s another full percentage point just since yesterday.  Yes, optimism is high.  Volume is right in line with the 4-week average with 6.7 billion shares traded. 

Wall Street ekes out small gain as earnings offset cost worries

I did mention yesterday that, in this environment, on any given day anything can and does happen.  And that’s what happened today.  The worries about Q1 being full of hot air, the tariff war threatening corporate costs and concerns over the bond market threatening inflation – in other words, all yesterday’s worries seemed to be easily erased today even though there were still wild swings.  The Dow bounced back and forth in a nearly 400 point range but edged upwards towards close to end 59 in the green.  

Wall Street slides as high bond yields fan cost worries

Yes, it looked like a real rout today but was it really that much different from previous sessions?  Yesterday the Dow dropped 300 before recovering almost all of it.  Today the Dow opened 130 up and then dropped 600 before recovering just a little of that.  So who knows how it’s going to change tomorrow?  But today was a little different since, for the first time, a hole has been punched in the dream of Q1 when Caterpillar, despite a glowing earnings report, announced that the rest of the year probably would not be so great.  

Wall Street ends mixed as investors eye earnings

Financial experts have been cautionary for some time now about the so-called FAANG stocks which have been mostly responsible for this prolonged bull market but which cause concern since they make up such a hugely disproportionate share of the index.  In other words, everything’s fine as long as FAANG is, but if FAANG falters, won’t we all be in a heap of trouble?  

Succinct Summations of Week’s Events 4.20.18

It's time for the weekly summation and this week the markets all finished in the green with the primary negative being the ongoing concern over tariffs.  This Sunday's bonus is the Ritholtz Sunday reading list, this time with articles of particular interest including "What If the Future is Better Than We Think?," "We're Bad at Evaluating Risk, How Doctors Can Help," and "How economies could insure themselves against the bad times"  Hope everyone enjoyed the weekend. 

AAII: Bonds Instead of Stocks

                It seems I forgot to publish this last night.  So the short explanation is that the market fell 200 points Friday due to continuing concerns over interest rates and a scare that smartphone demand is weakening, which throws a monkey wrench in all the FAANG action.  But volume is still below average while investors continue waiting out more Q1 reports.  17 percent of companies have reported, 80 percent have topped forecasts.  

... and now on to more current business ... 

Tobacco and tech drag on Wall Street; yields boost banks

'Twas another wild day with the Dow going down, down, down, trading in over a 200 point range until late in the day when there was a modest recovery to close down 83.  Once again as yesterday, the tumble in consumer staples was the main culprit as higher yields in the bond market had investors fleeing from the traditional defensive sectors, of which consumer staples is one.  Also weak Q1 reports from such stalwarts as Philip Morris and Procter & Gamble didn’t help matters.  Because of the higher yields, the financial sector and in particular American Express had an exceedingly good day.  So far ten percent of S&P companies have reported and nearly 80 percent have exceeded forecasts.  Volume remains below average at 6.5 billion. 

Energy, transport stocks lift Wall Street, IBM drags

At least four times today the Dow slipped wildly back and forth between the green and the red in a 110 point range before settling at close at a 38 point loss.  The big drag was IBM which turned in a poor Q1 report.  Transportation stocks did great with rail stock CSX and airline stock United Continental turning in glowing reports, but weak performance from the banks and consumer staples outweighed those.  It also was taken as a negative when today’s Fed report stated that, although the economy is generally doing very well, a trade war with China remains the big outlier, this despite the fact that investors are supposed to be hopeful about China.  Ironically, though today’s bad news brought the Dow down, the good news raised the forecast for Q1 profits almost a full whopping percentage point from 18.6% growth yesterday (and for weeks now) to an almost scary optimistic 19.4 percent today.  As investors wait for more reporting, volume remains below average at just under 6.5 billion. 

Wall Street rises on earnings hopes, Netflix soars

The gains from Netflix and United Health extended into today when Netflix shot up 9 percent as it smashed subscriber estimates and United Health’s Q1 earnings continued to impress.  Amazon also gave the market a big boost with the Supreme Court showing signs that it might not force the issue of online sales taxes.  Additionally both U.S. homebuilding and industrial production increased more than expected.  All in all, it was either very positive news all day or, as one analyst noted, a denial of any bad news, but the Dow shot up over 200 with similarly impressive gains in both the Nasdaq and S&P.  Volume was once again below average at 6.1 billion. 

Wall Street rises, focus turns to earnings from geopolitics

Since the attack on Syria happened after the market closed on Friday I thought it would be interesting to note how the market would react this morning.  Apparently investors took the weekend to assess things and decided that, if the Russians hadn’t retaliated by Monday, all was well.  Thus this morning the crisis was sort of seen as a done deal already and the Dow confidently boosted up over 200 points.  However, the very low volume of less than 6 billion indicates most are waiting on more Q1 results before making a bigger commitment.  Today United Health, Microsoft, and Merck all went up big due to good Q1 reporting.  The confident S&P Q1 earnings growth forecast remains at 18.6 percent. 

Succinct Summations of Week’s Events 4.13.18

I suggested yesterday that today would be a good day to stay in and read but the sheets of ice out there did not inspire much academic activity.  Instead I vegged in front of the TV watching movies all day. I also failed to find any articles on this Sunday evening that were interesting enough to post so I will limit today's submission to the weekly summation.  The good news is that we've made relatively good progress recovering from the big dip from a week ago.  The bad news is that, except for the stock market, there has been nothing but bad news everywhere else, bad enough that it's been "making most of us want to hide in a cave."  Are there any good caves here in Oakland? 

Major Trade Partners With the U.S. and China

Here's a very telling graphic showing the ebb and flow of our trade relations with our major trading partners throughout the world, and an especially evident eyeful as to why China will not be winning any trade war with the U.S.  As can plainly be seen, they need us a lot more than we need them.  In fact, they appear to be our only trading partner that needs us a lot more than we need them.  And as you are enjoying some home-bound fun due to our ice-laden weekend, Ritholtz's Saturday reading list as usual contains some titles that may be well worth a look.  Stay warm and don't slip!

Wall Street falls as bank stocks, Syria conflict weigh

Q1 began today and between JP Morgan slightly missing its target and Wells Fargo getting socked with a $1 billion penalty, the market went south to the tune of 122 points.  Even Citigroup suffered despite a good report.  The renewed talks of attacking Syria also weighed (as of this evening, the attack is now official; let’s see how the market reacts on Monday.)  The Q1 forecasters remain optimistic though with growth projections now at 18.6 percent, up 0.1 from yesterday.  Volume was considerably below average at only 5.8 billion.  Investors are probably waiting to see how the Syria strikes work out.  It will be a news-filled weekend. 

Wall Street gains on earnings optimism, waning Syria jitters

Yesterday the market fell over 200 because of renewed concerns over an attack on Syria. Today it’s being taken more as a “suggestion” that is likely not going forward so the market is up nearly 300 at close.  The evening news however “suggests” that Trump’s intentions vis-à-vis Syria, due to statements Trump made later in the day, may be much more than just a suggestion, so let’s see the reaction tomorrow since, before close today, the sentiment was “less talk of firing missiles;” this may not be the sentiment in another 12 hours.  Black Rock and Delta kicked off Q1 today with better than expected reports and the big banks will be following through on Friday, to much anticipation.  Volume remains below average at just over 6 billion. 

Wall Street falls on Syria concerns, interest rate worries

So yesterday the mere hint of conciliation on the trade issues with China made the market momentarily ignore the conflict in Syria and the market zoomed up 428 points.  Today Syria became the main headline again and the Dow fell over 200.  Adding to concerns was the latest Fed statement that generally contradicted the established market thinking that there would be only two more interest rate hikes this year by again just hinting that there might be a third after all due to rising inflation.  And global tensions sent oil up, boosting energy stocks a full percentage point.  Though nothing overtly negative was stated in the Fed minutes, it was taken as negative so the tone of the market remains nervous.  Q1 reporting will make the difference and that begins Friday with expected S&P earnings growth projected in the range of 18.5 percent, the biggest in seven years.  If it fails to hit that ambitious target, will we be seeing another correction?  Volume was below average at 6 billion. 

Wall Street rises as Chinese president eases trade worries

Another wild day when even the hint of the avoidance of a trade war caused a massive buying spree when China’s president said they will widen their markets, thus signaling “risk on” for trading today bolting the Dow up 428 points.  The market was also helped a great deal by Zuckerberg’s congressional testimony putting investors at ease that Facebook can handle the recent problems and that regulation will not be necessary.  But the real test comes when Q1 reporting starts, and it starts with JP Morgan Chase, Citigroup, and Wells Fargo reporting this Friday.  Volume was close to average at just over 7 billion.

Wall Street rises but pares gains late after report of FBI raid

First there was the report of the plan for trade negotiations with China and the Dow shot up about 400 points.  Then, late in the session, the news broke of the FBI raid on the office of Trump’s lawyer and everything came crashing down with all but 46 points lost.  What’s propping up the market right now is the wildly optimistic expectations for Q4, projected to be over 18 percent higher than a year ago, and will be starting this Friday when the major banks begin to report.  Volume was a little below average at about 6.3 billion. 

Succinct Summation of Week’s Events for 4.6.18

It's time for the weekly summation again and I certainly agree with the #1 point:  All things considered, it could have been much worse.  With all the jumping back and forth in Washington between threats of a trade war and reassurances there will not be one, the market has been nothing but jitters and this was one of the most jittery weeks in recent memory.  This Sunday's bonus is the usual Ritholtz reading list containing such articles of interest as why the states are so strapped for cash and why Trump is going after Amazon with such fervor.  But by far the most timely and useful article was the interview with master trader Mario Gabelli who, though he has nothing against passive trading and even spends some time defending it in the article, is himself a very successful active trader and defends that too and explains why he is not sweating the current environment where the passive approach seems to be the only one that works for most.  This is right up our alley.  Hope everyone enjoyed the weekend. 

A Millionaire Mindset Never Made Anyone Rich

This seems like a particularly appropriate week for Barry Ritholtz to be writing about proper investment mindsets, what with the current anxieties over a trade war with China and the market swinging back and forth in a 3-digit range on practically a daily basis.  So today's article is timely insofar as offering some sage advice about the proper ... and improper ... psychological approaches to growing our money in this very volatile period in which we find ourselves. 

Wall Street ends down 2 percent as U.S.-China trade fears intensify

There was a poll yesterday showing public opinion only 20% hopeful that there would be no trade war, while the recent trend among the market wizards were about 80% hopeful that it was all talk for the sake of negotiations but there would be no action.  Today that all changed when Trump announced that there is a trade war and that it is likely to be painful, so the public turned out to be right and the wizards of Wall Street wrong.  The Dow plunged nearly 800 points before recovering in the final hour to close down 572.  Boeing and the whole industrial index once again took a big hit.  Other bad news included the payrolls report showing a smaller than expected increase.  For the week all three indexes are down between ½ and 2 percent.  Volume was in line with recent averages at 7.2 billion. 

Wall Street posts third day of gains as trade fears ease

Day #3 of gains; I think that’s what the experts were hoping for as fears of a trade war decrease and optimism over an ebullient Q1 increase since, with the new tax law now playing a large role in corporate earnings, the forecast is for a sharply increased Q1, the highest growth in seven years.  Even Boeing is bouncing back as the Dow picked up another 240 points and even Amazon gained nearly 3 percent.  In fact the whole so-called FAANG group is up by as much as 3 percent.  Volume was a little below recent averages at 6.4 billion. 

Wall Street closes higher as China tariff fears ease

Yesterday’s expert said today would be important and it was, the second consecutive session of triple-digit gains as investors get more relaxed about avoiding a trade war and more assertive about a positive Q1 coming.  The Dow is up 230 though both Boeing and John Deere took a dive as they are both viewed as being most vulnerable in a trade war.  Volume remained vigorous at 7 billion shares traded. 

Wall Street closes higher as S&P rises above key support level

Yesterday the S&P moving below the key 200-day moving average prompted a massive selloff with the Dow closing down 458 points.  Today was looking equally bleak until the final hour of trading when the index once again moved above the moving average and that triggered an enthusiastic buying streak pushing the Dow up almost 390 points recovering most of Monday’s losses.  Another key contributor was the comeback of Amazon after the White House issued a statement that no action was planned against the company despite all tweeting to the contrary.  As today’s expert states below, 1-day does not a buying spree make; we need two days to see if this will be sustained, so tomorrow will be important.  Investors ignored fundamentals yesterday but they’re back reassuring everyone today.  Q1 reporting is right around the corner and S&P earnings are expected to increase over 18 percent.  Volume remains brisk at over 7 billion. 

Wall Street tumbles on tech sector, trade war worries

Let’s not underestimate the volatility of this market, but today was extra special volatile when the techies went flying to the exits because the indexes went below the notorious 200-day moving average.  The quant traders automatically go into sell-mode when this happens and with so many of those out there, everyone else followed their lead despite the fact that fundamentals remain strong.  Overall, the Dow lost over 450, the Nasdaq nearly 200, the S&P almost 60.  It was quite the rout with Amazon creating the biggest drag in the wake of Trump’s recent attacks on them.  Volume was quite brisk and above average at 7.7 billion shares traded. 

Succinct Summation of Week’s Events for 3.30.18 (plus Chicago)

On this Easter Sunday I was hoping to find something more in the holiday spirit but could find nothing.  There is this rather informative article about the problems in Chicago from The Atlantic that Barry Ritholtz put on his blog this morning so I'm including it since The Atlantic always has excellent articles.  The usual weekly summation is also included below, the highlights being jobless claims at their lowest in 45 years and Q4 GDP figures hiked a whopping 20% to 2.9% growth.  Enjoy your spring break, if you get one.