Wall St. bounces back, led by industrials

As has happened before, after a sad triple-digit loss yesterday with the FAANG stocks falling, today the industrials came to the rescue and pushed all the indexes back up, the Dow 108 points, recouping much of Monday’s losses.  In fact both the S&P and Dow had their biggest monthly gains since January and the credit today is going to talks between the U.S. and China, once again cooling down anxieties about a tariff war.  Q2 continues great guns with earnings growth now forecast at 22.9 percent, up from 22.6 yesterday and 20.7 July 1^st.  Volume was considerably above average at over 7.2 billion shares traded. 

Widespread tech sell-off drags Wall St. down

When the FAANG stocks rise, so does the market.  When FAANG falls, so goes the market.  The latter was the case today with Facebook and Netflix sliding and Apple, Amazon and Google all following suit.  Tech fell across the board pushing all three major indexes with it, the Dow down 144, the Nasdaq 107, the S&P 16.  Part of it is tariff jitters, since the tech stocks will be particularly vulnerable.  Part of is the traditional downturn typically seen in midterm election year cycles.  Nonetheless, Q2 continues to go very well, now with just over 50 percent reporting in and 82 percent beating forecasts.  The oddsmakers now put Q2 earnings growth at 22.6 percent, up from 22 percent last week and 20.7 July 1^st.  Volume was above average at 6.4 billion shares. 

Succinct Summation of Week’s Events 7.27.18 (plus A Look At The Big-Picture)

It's time for the weekly summation, the big plus being a 4.1% annualized GDP growth rate for Q2 and the possibility of the U.S. and the E.U. avoiding a trade war.  On the other side ledger, experts have cautioned that the 4.1% growth may be padded by panicked stockpiling to head off tariffs, something that is likely to haunt later. 

Recession Indicators

Last weekend I shared an article from Fortune magazine providing an extensive analysis of the "glass half empty" view of the economy and why the author believes we are on the verge of a major economic downturn.  I shared it as a way of providing balance to the various points of view I run across in my readings.  This week, I've found another very good article about market downturns from Reuters, the source from which I gather my daily market updates.

Tech stocks weigh on Wall Street

It may have been a touch premature yesterday to conclude that Q2 had properly shielded the market from the disastrous day that Facebook had had.  But it caught up with investors today as the Dow plunged 170 points on weak earnings reports from the tech sector, with four of the FAANG stocks taking another hit and with Facebook now giving the Nasdaq a drubbing for the second consecutive session and its biggest daily percentage drop in a month.  On news that the economy had grown 4.1 percent in Q2, its fastest pace in four years, the Dow recovered to close down just 76 points.  Amazon also had a very good day, posting profits double the estimates.  But there was a note of caution on the Q2 news:  much of it is due to farmers rushing shipments to beat tariffs, something we are warned is bound to come back to haunt in the future.  Volume was vigorous at 6.8 billion shares. 

Facebook sends Nasdaq tumbling, but trade optimism boosts Dow

It’s been a subject of concern for some time now that it may not be such a good thing for the so-called FAANG stocks (Facebook, Amazon, Apple, Netflix, Google) to comprise such a disproportionately large share of the market so that if one goes, the entire market could follow.  This leads to the concern that investing in index funds may not be the best strategy after all. Today we certainly got a demonstration of that when Facebook dropped almost 20 percent of its market value and the infection seemed to spread to Amazon and Twitter.  So the FAANG heavy Nasdaq fell 80 points but the industrial heavy Dow had another 3-digit rally because the tech problems got overshadowed by the efforts to resolve the EU tariff situation.  So Q2 and all the underlying factors that are making it so strong saved the day and the Dow zoomed up another 112 points despite Facebook’s very bad day, the worst one-day loss of any U.S. company in history.  Volume was very healthy at just over 7 billion shares traded. 

Wall St. rises as Trump touts EU trade concessions

It was another big 3-digit day with now 30 percent of the S&P having done their Q2 reporting and a remarkable nearly 86 percent having topped forecasts.  If that keeps up, Q2 will be the biggest on record since record-keeping began in 1994.  That combined with the hint of good news about Trump negotiating trade with the EU sent the Dow up 172 points, most of that in the final hour of trading.  The Dow had dropped more than a hundred points earlier in the session so there was more than a 300 point swing in the index today.  One expert noted that everyone’s looking for the beginning of the bear market but that so far there have been no economic indicators to support that scenario.  Like yesterday, volume was again closer to normal levels and, at 6.6 billion shares traded, above the 4-week average of 6.1 billion. 

S&P reaches highest level since February as Alphabet shares soar

After several losing sessions, the Dow came back big today with a 197 point gain after the FANG companies and several others posted some pretty impressive Q2 results.  The Nasdaq too was up pretty big early in the session only to tumble into losing territory later and recover by close to break-even, the reversal being credited to “profit-taking driven by lingering concerns over trade issues.”  But even with the Nasdaq the good news outweighed the bad today as the index is over 13 percent up for the year, more than twice that of the S&P.  And the best news is that volume is finally up to normal numbers, today reaching over 6.5 billion against the 4-week average of 6.1 billion.  Perhaps Q2 is finally taking hold. 

S&P 500 index rises as climbing yields boost financial sector stocks

It was another day when the market couldn’t decide whether to be excited about Q2 or fearful of the trade war.  So the Dow swung back and forth in a hundred point range all day to ultimately close just 13 down.  Yes, Q2 news continues to be good.  And even the trade war got a help from the news that both Mexico and the EU are preparing for talks with Trump.  But there remains more than a few investors who await further developments as was reflected in the very anemic volume of only 5.5 billion shares. 

Succinct Summation of Week’s Events 7.20.18 (plus Supreme Court nom history)

It is time for the summation which this week includes jobless claims falling to their lowest level since 1969 and though two more rate hike odds have made it into the negative column namely because they may impact some short term dampening of the stock market, they should be in the positive column since they will be good for the long term health of the economy.  After all, rates have been too low for too long and is one of the reasons there is so much uncertainty in the markets. 

The End Is Near

With so much of the financial media so optimistic about the markets (mainly because with the exception of all the anxiety over the tariffs, everything has been nothing but good news), Fortune magazine has this month published an extensive treatise about how much trouble they think we're in. I'm not sure I can agree with all their assumptions.  After all, it's not all good news.  Interest rates remain too low and underemployment remains too high and there remains considerable uncertainty due to all the mixed messages coming out of Washington.

Wall Street slips as trade worries dampen upbeat earnings

Q2 is going so well that today, with 17% of companies now having reported and with an astounding 84% beating forecasts, today’s new estimate for earnings growth is now at 22%, up from 21.5 yesterday and 20.7 July 1^st.  It was sufficient to shoot the Dow up nearly 140 points in early session only to be dogged by those danged tariff threats later on that effectively wiped out all the gains and closed at near even.  Traders are playing a ping pong game.  As today’s New York strategist commented, “There’s a divided line on the street.  One side believes (the trade dispute) is only going to lead to a global recession, the other side that the president is trying to get the other side to negotiate.”  Unfortunately we’re in for some messy times if it turns out the other side is giving the president too much credit.  Volume has fallen again a little bit to 6 billion, under the 6.4 4-week average as investors try to decide which side they’re on. 

U.S. stocks fall on sour earnings, trade fears

The trade war is once again front and center with investors with today’s EU comments of retaliatory measures being planned against the U.S., measures that would have a decided negative impact on the auto industry.  This resurgence of fear dropped the Dow sharply right out the gate and though there were efforts to recover, the close was still down almost 135 points.  And though eBay turned in a disappointing Q2, the market still remains supremely confident and the forecast for Q2 earnings growth is now up to 21.5 percent, up from 21.4 yesterday and 20.7 July 1^st with 14% of S&P companies having now reported as of today.  Adding to the optimism was today’s Labor Dept report that puts unemployment claims at a 48-1/2 year low.  So what’s wrong?  Just what Powell said yesterday to paraphrase, “rising protectionism would over time pose a risk to the U.S.”  At 6.3 billion shares traded, volume is just barely below the 4-week average.  It appears the light trading season may be ending. 

S&P 500 climbs to over five-month high on strong earnings

More positive Q2 reporting coming in today that shot the Dow up another 79 points with particularly upbeat results from the transportation sector, Amazon touching the $900 billion mark for the first time and threatening Apple’s standing as history’s most valuable company, and Berkshire Hathaway getting a big boost by the expectation of stock buy backs.  The only bad news:  “The market would be a lot higher right now if it wasn’t for people worried about trade.”  Almost ten percent of the S&P has reported in and now 87, not 85 percent, that are beating forecasts, causing the Q2 forecast to be pushed up again, today to 21.4 percent, up from 21.2 yesterday and 20.7 July 1.  And another warning from Chairman Powell that the tariffs could pose a risk to the U.S.  At 6 billion shares traded, volume is still lighter than average but creeping ever closer. 

Wall St. climbs on Powell comments, earnings

The Dow notched another 55 points today with Fed Chairman Powell giving his ringing endorsement on the health of the economy and predicting more of the same for the future.  It was sufficient to also increase the Q2 forecast to 21.2 percent, up from 21 a few days ago and 20.7 a few weeks ago.  Also boosting optimism were three of the FAANG hitting record highs and a report showing an increase in U.S. manufacturing.  Netflix also rebounded a good 5 percent after its 14 percent fall yesterday.  So far 8 percent have reported and 85 percent of those have exceeded forecasts.  Volume remains below average but at 6 billion is getting close.

S&P 500 dips as energy shares fall; Netflix drops late after results

It was six of one and half dozen of the other with the financial stocks rebounding from Friday’s losses after poor Q2 reporting, balanced out by a drop in energy stocks with more crude coming from Libya and Russia.  The closing result was 44 more points on the Dow though both the Nasdaq and S&P fell.  There remains great optimism over Q2 with the forecast remaining at a very optimistic 21 percent and, though few companies have thus far reported, over 85 percent of those that have exceeded forecasts when the average of the last four quarters has been 75 percent.  Still it’s very early which is reflected in the still very light volume of only 5.4 billion shares as investors await more results. 

Succinct Summation of Week’s Events 7.13.18 (plus U.S. home values)

The week's summation is below with jobless claims being down but job openings also being down.  It seems the net result between the positives and negatives was a wash, which was pretty well borne out by the very low volume in trading this week as investors await Q2 results before diving in (or out.)  The bonus this Sunday night is a very instructive graphic that shows that U.S. home values fell about 40% during the depths of the recession (something we knew) but the graph also shows something some of us may not know -- it seems that home equities have been completely back to their pre-recession levels for about a year now ... and now and then some. 

The Flawed Legend of Preet Bharara

Welcome to Saturday Night Marias!  I've had quite an exhausting day so I'm going to take it easy tonight, which is just as well because having spent the last few minutes looking at Barry Ritholtz's weekend reading list, there really isn't much there this time.  But there is the one article from The Nation which attempts to submit yet one more explanation for the Wall Street debacle that led to the Great Recession.  But it's same old, same old -- the argument that no one ever prosecuted the Wall Street crooks who were believed responsible for the great subprime mortgage crisis that triggered the recession. 

S&P 500 at five-month high, but banks weigh after results

For the second consecutive session the market has put trade war worries on hold in order to revel in the praises of the S&P closing at its highest in five months, and in continued optimism in Q2 despite today’s disappointing results from the big banks which took the entire financial sector down 0.5 percent.  Even JP Morgan Chase suffered even though it turned in a good report.  But there remains enough optimism out there to bring the Dow up another 94 points, though on very light trading of 5.3 billion shares, about the lightest for the year, it appears most investors are still awaiting more results. 

Wall Street bounces back; technology, industrials lead

The market is looking desperately for any excuse to ignore the trade wars and today they got it in spades with Microsoft and Amazon hitting all-time highs and Microsoft rising for the first time above the $800 billion mark in market value and joining Apple, Amazon and Alphabet in the $800 billion club.  There is now a very real race on to see which one of these FAANG stocks will be the first in history to reach $1 trillion in market value.  It all provided enough excited to boost the entire tech index by almost 2 percent and shoot the Dow up 224, erasing all of yesterday’s losses.  Investors are still hoping that there will be an eventual agreement between the U.S. and China and thus avoid the trade war, but there are of course those who feel that such a consensus may be naïve.  ‘Tis no matter.  Tomorrow Q2 reporting begins with the big banks taking center stage and that’s when the real games will start.  Volume remains quite light, only 5.8 billion today, but that is likely because most traders are awaiting Q2 reporting. 

Wall Street snaps four-day rally; latest trade threat weighs

The warning was pronounced yesterday that with the pending announcement of $200 billion worth of new tariffs on China, that yesterday’s momentary highest close since February might indeed become a one-day event.  Sure enough the market didn’t like and immediately dropped like a stone and continued dropping to close 219 down.  (Was anyone short selling?)  Once again, the U.S. companies doing the most business with China – Boeing, 3M, Caterpillar – took a big hit.  The only good news is that investors are still hoping that Q2 will overshadow trade and that Trump’s history of changing his mind when the due dates arrive will continue.  Volume remains below average at 6 billion. 

S&P 500 posts highest close since February; futures fall late on tariff fears

Yesterday was a big day with a 320 boost in the Dow.  Today was pretty big too, the Dow up another 143, and big enough that, for today anyway, the index is the highest it’s been the correction started February 1^st.  Once again, concerns over trade wars have been momentarily displaced by the excitement over an expected big Q2, though with an announcement of more tariffs coming, that may change soon.  What is particularly interesting in today’s business news is the S&P earning graphic that shows where most of the growth is coming from – energy at over 140 percent!  Energy has been in the dog house for such a long time; is it now the new hot investment?  Volume remains low, less than 6 billion, so vacation season isn’t over yet. 

Dow, S&P 500 post best days in more than a month; banks lead gains

Today the market really put trade war concerns on the back burner in a big way and transferred the focus to what is widely expected to be a terrific Q2, earnings growth expected in the neighborhood of 21 percent.  Thus the bank and financial indexes climbed over 2 percent and the Dow zoomed 320 points.  It also helped that Q1 results were revised upwards.  But at 6 billion volume is still below average so there are still some traders out on vacation. 

Succinct Summation of Week’s Events 7.6.18 (plus the answer to age discrimination)

It's again time for the weekly summation but due to the holiday week, trading was relatively sparse so the swings back and forth relating to trade war concerns and employment numbers have to be taken with a grain of salt.  We'll be seeing the real reaction in the next day or two. But one bit of good news (that ironically ended up in the negative column) was that unemployment rose to 4 percent because more long term unemployed were getting back in the job market.  In other words, the economy is bright enough that the jobless who had given up before are now coming back.

A Quantitative Method for Asset Allocation

Today's Ritholtz posting on his Big Picture blog is right up the alley of all you techies, and right from our most trusted source ... the AAII!  It's 2600 words so it may be easier to click on the link to read it, especially since not all the graphics and tables translated to this blog.  So assuming you get that far, you may want to use the link anyway ... but for your convenience, most of the text of the article is below.  Enjoy the rest of the holiday weekend. 

U.S. jobs growth lifts Wall Street, offsetting tariffs

Once again investors have put trade war concerns on hold in deference to the payrolls report which came in 17,000 higher than expected and thus allayed fears of a buildup in inflation.  That combined with a reduction in the tariff threats to China caused the Dow to sprint up nearly 250 points during the session though at the end it came back down to close 99 up.  It remains market sentiment that any coming trade war is more talk than action at this point but most are also agreed that if the talk goes on too much longer, it could very well roil the markets.  Volume this holiday week Friday remains very low, just 5.3 billion shares traded.  So the real action begins Monday when everyone gets back from vacation. 

Wall Street rises on U.S.-EU trade relations optimism

Once again trade war concerns got placated for the day, this time by Merkel’s statement that the EU would back off their car tariffs on the U.S. if the U.S. would reciprocate and the Dow rebounded over 180 points.  Also aiding in this endeavor was today’s Fed statement that the economy remains strong.  Investors are still looking to Friday when the China tariffs kick in but the sentiment today seems to be that the China war is “a lot of rhetoric but not a lot of actual action.”  The market is also looking to Friday’s non-farm payroll report even if today’s private employer report added 13,000 fewer jobs than expected.  But due to the holiday, volume remains way below average at only 5.7 billion so nothing that happens this week is either going to shake or surge anyone’s confidence. 

Give me your tired, your poor, your huddled masses ...

These words were first written in 1883 and became a part of the Statue of Liberty when it was dedicated in 1886, instantly came to symbolize the spirit of the monument and the nation, and has remained so ever since.  Lady Liberty herself was given to us as a gift from the French at a time when we were still paying France back for our war debts incurred for them financing and helping us to win the Revolution.  The statue serves as a perpetual reminder that we are and always have been a nation of immigrants.  Thus I thought it hugely appropriate that Barry Ritholtz chose this Independence Day to do a salute to the history of U.S. immigration from 1820 to present in this delightful short YouTube video.  Hope everyone enjoyed the fireworks.

Dips in Facebook and Apple leave Wall Street lower

Well, there’s trouble in River City (or at least Menlo Park) as the Facebook data breach scandal grew deeper today bringing the stock down more than 2 percent and the FAANG-heavy index down 132 points.  There has been considerable commentary for some time as to the disproportionately high weight the FAANG stocks have on the market so that when something bad happens to one, the whole system takes a shock. It wasn’t just FB; Apple and the rest of the tech sector took a heavy hit too.  Despite solid fundamentals and a strong economy, trade war fears continue to present a good deal of uncertainty which is going to be hard for the good news to overcome.  The good news for today though is that the tumble doesn’t mean that much since, going into the holiday, volume was exceedingly light, under 4 billion. 

Wall Street ends higher, helped by tech rally

So the market had still one more session where trade war concerns went to the backseat and everyone loaded up on tech.  But the day wasn’t entirely rosy as the Dow dropped 100 points right out the gate and then continued dropping for a total low of 230 before rebounding to a gain of 35 points.  Since the July 6^th deadline for the tariffs on China is on everyone’s mind, maybe the gains in Microsoft, Apple, and Facebook weren’t so offsetting after all.  Even Vegas is already feeling the sting from the impending tariffs as revenues from the casinos in Chinese Macau rose less than expected.  But the trading was light as many are already off for the holiday week and volume was quite a bit below average at just 6.2 billion. 

Succinct Summations of Week’s Events 6.29.18 (plus 10 year S&P graphic)

Below please find the usual weekly summary.  Income growth is up 4 percent and the GDP price index is 15 percent higher than expected.  Somehow the savings rate rising 2/10 of a percent made the negative column, though this should be considered a positive given the recent Fed rate hikes.  The bonus this Sunday night is another very telling graphic that shows that as the stock market and dividends have risen throughout this recovery, stock buybacks have risen even more, giving more credence to the growing strength of the economy.  Hope everyone has weathered this steamy weekend okay.