Wall St. ends last day of haunted October in the black

With today’s second consecutive 3-digit rally, Q3 once again is back in charge as the market finished this very difficult month in the black.  With the tech sector having come so close to correction levels in the past week, today was the big comeback with all the FAANG stocks gaining and the Nasdaq gaining 3.6 percent in the last two sessions.  But October was rough – down 6.9 percent for the S&P, 9.2 for Nasdaq (the biggest monthly loss in ten years) and 5.1 for the Dow, the biggest monthly decline in almost two years.  Still, the prognosticators soar with the Q3 forecast now hiked to 26.3 percent, up from 25.3 just yesterday.  All bad news aside, the market runs on expectations and these expectations are sky high.  Volume was certainly also sky high at 9.8 billion shares traded. 

Wall St. rebounds as chip, transport shares surge

So is it really a correction that’s going on out there or is it just trade war/Q3 jitters that almost immediately get interrupted by bargain hunters who know that the market is a little over-valued to begin with?  Anyway, today was a bargain hunter’s paradise as the Dow went straight up 431 points very nearly recouping all the losses from the last two sessions.  As today’s expert has stated, the volatility is not because of a poor Q3 (we’re having a very good Q3) but because despite the fact that most of the companies are doing quite well, the few that aren’t happen to be some of the biggest names, and that’s been disquieting.  But not enough to dampen the forecast which is now at an astounding 25.3 percent increase in earnings (vs 23.6 last week) so the smart money remains firmly entrenched in the growth column.  As has been the trend lately, volume was again very high at 9.6 billion shares traded. 

Wall Street drops on trade worries, S&P 500 nears correction

Everyone was hoping for the big turnaround today.  And that’s exactly what happened right out the gate this morning, the Dow straight up over 350 points by about 11 a.m.  Then came the announcement that more tariffs would likely be coming against China, a lot more tariffs.  And all the king’s horses and all the king’s men … you know the rest of it.  The Dow tumbled and tumbled over 900 points before recovering in the final half hour to a 245 point loss on the day.  That’s how fragile the markets are these days.  Even a whiff of trouble sends everyone running for the exits, today so severely that both the Dow and S&P came within a hair’s breath of the 10 percent correction mark from their most recent highs.  The FAANG stocks were hit particularly hard and lost more than $200 billion in value between Friday and Monday.  Companies like Boeing that are exposed to China were very hard hit.  But Q3 profits and economic growth remain strong.  Things might settle down a bit after the election.  Volume was very vigorous at 9.3 billion shares traded. 

Succinct Summations for the week ending October 26th, 2018 (plus market timing)

Below please find the usual weekly summation.  On the plus side, GDP for Q3 came in higher than expected and durable goods orders actually increased instead of the expected decrease.  The negatives include new home sales and inventories coming in under expectations. The bonus this Sunday evening is another instructive graphic which, in one simple eye-shot, illustrates a concept that most of us are already well familiar with -- that overall most of those who try to time the market do not do nearly as well as those who don't.  The more timing that goes on, the more the best market days are missed.  Hope everyone had a great if wet and cold weekend. 

Does trade cause growth? - Our World in Data

While we wait until Monday to see whether this week's slide continues or begins to turn around, I found this very instructive article and graphic today that pretty clearly illustrates that there is a definite correlation between global trade and domestic GDP.  Looking at data going back to 1945, the inescapable conclusion is that the more trade you have with other countries, the higher your own GDP goes.  It's a quick read and an even quicker eye-shot.  Keep enjoying this pre-Halloween weekend.  Stay warm and dry.

S&P 500 ends at lowest since May as tech, internet stocks tumble

It was mentioned yesterday that because both Amazon and Google turned in bad Q3 reports after the closing bell on Thursday, that there might be another major sell off today.  That’s exactly what happened, another very bad 3-digit loss that brought the entire FAANG group down, put the S&P below the 10 percent correction level, and the Dow back in the red for the year.  This was all despite the fact that there was a bunch of good economic news today.  GDP growth slowed less than expected, consumer spending was at its strongest in four years, there was a surge in inventory investment, and the VIX did not go up again.  The other good news is the consensus that the tech sell-off was caused by elevated valuations, which makes it a good thing.  Investors continue looking for bargains but there’s no getting around the market jitters caused by tariffs, inflation, and the midterms.  Volume was very high at 10.2 billion. 

Wall St. rebounds after upbeat earnings, bargain hunting

After yesterday’s really big rout, today was quite the bump with investors regaining some faith when Microsoft turned in a sterling report and the market decided Wednesday’s big sell off was an overreaction and started buy tech again like crazy, raising that sector’s index by nearly 3 percent.  Other big Q3 reports included giants Ford, Visa, Whirlpool and Twitter.  The Dow was actually up over 500 points as late as 3:30 but slumped in the last few minutes to close at a +401.  The rally may also have been triggered by the fact that the recent slumps have devalued the S&P to a 2-1/2 year low so there are lots of bargains out there.  Once again, despite the bads news and nerves, the Q3 forecast has been raised again today, this time to 23.6 percent.  This compares to 22.4 just yesterday and 21.8 two weeks ago.  Some bad news:  both Amazon and Google turned in bad Q3 reports after the closing bell.  Are we looking at another sell off tomorrow?  Volume remains brisk at 9.2 billion. 

Nasdaq confirms correction while S&P and Dow erase 2018 gain

It was another major drubbing today which really clearly articulates how fragile investors are when it takes just a few companies turning in a not-so-great Q3 to begin another round of major panic selling.  Today it was techies Texas Instruments and STMicroelectronics issuing reports warning of slowing demand.  That combined with yesterday’s disappointments from Caterpillar and 3M proved the straw that broke the investors’ back.  The chipmaker index took its biggest tumble in four years.  There was also bad news from both housing and U.S. factories, all blamed on rising costs and prices due to tariffs and interest rates.  Actually the day started over a hundred points up before starting the all-day slide with the range between the high and the low almost 800 points.  But here’s the deal.  Despite the 608 point rout, despite all the bad news, the forecast for Q3 not only did not fall but actually rose to 22.4 percent, up from 22 just yesterday and 21.6 two weeks ago.  So go figure.  Despite all outward appearances, there is still a great deal of optimism out there.  Volume was again very high at 9.6 billion.  

Wall St. extends recent fall but ends well off day's lows

The bad news is that the entire day was in the red.  The really bad news is that the Dow dropped almost 550 points right out the gate.  The good news is that it steadily if choppily rose throughout the session to recoup all but 125 points.  What triggered the big sell off this morning was predicted yesterday.  The giants reporting in this week would determine a good or bad Q3.  The first two giants to report in this morning – Caterpillar and 3M – unfortunately did not deliver expected revenue and profit-growth and this was attributed largely to the trade war, reigniting all the worries investors have about the market in general.  But as the session progressed, good news started filtering in giving investors cause to believe the news may not be so bad and start buying again.  Despite the initial panic, projections for Q3 profit growth remain unchanged at a vigorous 22 percent and volume was very high at 9.1 billion.  

Dow, S&P fall as earnings season picks up; tech boosts Nasdaq

It was another very choppy trading day swinging back and forth in a 330 point range and, for a brief instant at the open, it was even over a hundred in the black, but then started its downward seesawing to close 126 down.  What is happening is the biggest Q3 reporting week coming up with giants Amazon and Google, among others, determining whether Q3 will be boom or bust and investors hedging their bets with some early selling before any potential bad news.  Still, the forecast remains very optimistic at 21.9% growth but concerns over trade, interest rates, and the global economy continue to haunt.  The good news is that both the EU and China bounced back today, especially with Moody’s giving Italy a thumbs up.  But the consensus remains that uncertainty and volatility will rule at least until the midterms.  Volume remains vigorous at 6.9 billion. 

Succinct Summation of Week’s Events 10.19.18 (plus Interest Rates Matter)

Below please find the usual weekly summation with more job openings on the positive side and more problems in Europe on the negative.  The bonus this Sunday is the summary page from this week's WealthTrack with Consuelo Mack as aired on PBS.  Her guest this week was U.S. interest rate expert James Grant and his message is "Interest Rates Matter."  You may be able to watch the episode on her web site, or catch it on PBS.  Hope you're all enjoying this fall weather.  At least they're saying it's going to be dry this week.  And is anyone investing $2 in this historic $1.6B Mega-Millions on Tuesday?  302M to 1 odds.  So if you just buy 302 million tickets using all 302M possible number combos, you're guaranteed to win.  (But it's probably not physically possible to buy that many tickets and be sure you've caught every possible combo -- not in just a few days.) 

The Bond King Speaks

With interest rate hikes rising and the market going schizoid over fears of the Fed hiking them too quickly (nah, I don't think so... ) it is time at long last to take an overdue look at the value of bonds.  Today's Barry Ritholtz post from Forbes is just what the doctor ordered, an extensive interview with The King of Bonds, Jeffrey Gundlach.  It's only seven pages and provides not only a very good overview of the bond situation but also of the current market in general.  Try staying warm and dry on this cold and wet weekend.

S&P falls on interest rate, trade concerns; P&G lifts Dow

The market certainly was in a tizzy today bouncing back and forth like crazy in a 260 point range.  The good news is that all of this zigzagging was almost all in the green.  The bad news is trade concerns and rising interest rates continue to haunt investors, something that is not likely to abate any time soon.  And though the session high was up 230 points, the day still ended low because of bad news from home sales and the fact that so far only 62 percent of S&P companies have beaten expectations which is considerably below the 73 percent average of the last four quarters.  Volume continues vigorously at 7.6 billion shares traded. 

Wall St. slides as Saudi Arabia, Italy add to economic concerns

There was a triple whammy today that kept the Dow seesawing back and forth all day, but always in the red.  The good news is that at 2 pm, the index was down almost 500 and recovered a good chunk of that just before close.  So maybe tomorrow will be a better day.  The bad news is that (a) the EU issued a dire warning about Italy’s economic stability, (b) the decision to back out of a conference sparked further worries about U.S.-Saudi relations, and (c) Chinese stocks fell overnight sparking more worries about the impact of the trade war on China’s economy.  The triple threat was more than enough for a 3-digit sell off on healthy volume of nearly 7.8 billion shares.  

Wall St. falls as investors eye a united hawkish Fed

Today’s 91 point drop in the Dow, that has been attributed to the 2 pm publication of the Fed minutes stating a newly hawkish position on future rate hikes, was really nothing compared to the 320 point drop that happened shortly after 10 a.m. only to rebound by noon to ever so briefly be about 10 points in the black before slipping ever so slightly into the red again until 2 p.m. when the slide became more pronounced after the Fed announcement.  But with Netflix delivering such great news after close last night, why the sudden severe sell off when everyone was expecting another rally?  At least in today’s Reuter reporting there is only discussion of the relatively minor drop after 2 p.m. but not of the big one at the open.  So the good news is that all was recovered once again before the Fed had its spoiler.  It was a choppy day again; so what’s new?  Volume was again vigorous at just over 7 billion shares traded. 

Wall St. rallies over 2 percent with earnings, data boost

Investors have been hoping that a good Q3 might make a difference in last week’s plunge and, so far, it looks like it is.  Just like last Wednesday was a shot straight down, today it was in reverse – a shot straight up almost 550 points!  Goldman Sachs, Morgan Stanley and United Health all turned in Q3 reports that exceeded expectations.  And just after close, Netflix turned in a whopper so we can hope for a continuation of this rally tomorrow.  But as for the here and now, last week’s losses are recouped and the Q3 forecast has today been upped once again to 21.8 percent earnings growth vs 21.6 yesterday and 21.3 on Friday.  This has happened every quarter in the last few years.  Let’s hope it continues.  Volume remains at a very healthy 7.5 billion.  

Tech stocks drag down Wall St. as earnings worries weigh

Just like Friday, the Dow seesawed like crazy again today, at least three times being a hundred or more points up and several times being up to 60 points down before plummeting the final hour and closing almost 90 down.  After a pretty good comeback on Friday, the FAANG stocks had another bad day with Apple in particular falling more than 2 percent and the overall tech index 1.6 percent.  But Q3, which is now underway, is still expected to be quite good and the forecast was hiked today to 21.6 percent earnings growth up from 21.3 on Friday.  Let’s hope that, like Friday, today’s many peaks and valleys are indicative of investors believing they’ve found a bottom despite today’s report that the 2018 deficit is the biggest since 2012 due to the combined impact of tax cuts reducing revenues and the increased cost of paying the interest on the increased debt.  At least volume is settling down and was today at a more typical 6.9 billion, which may also be indicative that the market has found the bottom.  It has been a typical pattern in recent years that quarterly reporting exceeds forecasts, which almost always pushes the market up.  With Q3 coming in over the next several weeks, if past patterns are at all valid, that should be the case.  Wait and see. 

Succinct Summation of Week’s Events 10.12.18 (plus Per Capita U.S. Labor Hours)

Below is the usual weekly summation, the main positive being once again a hope for avoiding a trade war with China, and the big obvious negative being the worst plunge in the stock market since March.  The bonus this Sunday evening is a nice little graphic showing that we Americans are among the hardest working people in the world, or at least put in the most hours.  As the graph shows, per capita annual hours for U.S. workers has risen dramatically since the 1960s while at the same time have fallen dramatically in Europe.  In the U.S. we take such great pride in having the highest productivity in the world but is it possible that, if we recalculate on a per capita basis, we'll find we're not doing as well as we think? 

Heritage Capital: Assuming The Worst

The last three market days have certainly had most investors sitting on the edge of their seats waiting to see what might happen next. I've already given my perspective but I thought Thursday's musings from Heritage Capital Research were particularly insightful not only on what happened Wednesday and Thursday but on overall market issues in general.  It's 1400 words but don't let that deter you; pasted into Word it's really only five pages and is a mini-course on current market mechanics.  In short, they're saying that investors are assuming the worst even though there's no good logical reason to do so and that what happened was due a lot more to algos gone wild than to anything that's real.  That is not to say that just because it's not necessarily based on reality that's it's not also worrisome.  After all, in the market, perception is reality.  Enjoy our very cool weekend.  Don't let the frost bite. 

Wall St. rebounds with technology stocks leading the way

A decent comeback today as Q3 reporting began with Citigroup and Wells Fargo turning in reports besting forecasts and boosting the Dow 287 points.  Like yesterday, the index was up and down all day.  Shortly after open, it was already up almost 400.   In fact just minutes before close, it was up almost 400.  Let’s hope the Q3 optimism continues and that these swings are investors telling the market that they’ve found the bottom.  Probably not, at least not right away, but at least it’s in the right direction.  The FAANG stocks that got hit really hard this week had a really good comeback with most hitting 4 to 6 percent gains.  Volume remains way above average at 8.9 billion. 

Wall St. extends slide with trade and rates in focus

The rout continues into a second session with the Dow falling more than 500 points again as investors fret over whether rising rates and tariffs will hurt corporate earnings.  The VIX is up to almost 25, the highest since February.  So there are a lot of frayed nerves out there which hopefully will be placated when Q3 reporting starts tomorrow.  Again energy was hit hard by the again chronic problem of a new report showing excess crude inventories.  Volatility is expected to continue through next week.  If there’s a good side to today’s news it’s that there were a lot of swings in the market.  It was up and down and as late as 3 p.m. was down almost 700 points before recovering to a 545 loss.  But the intraday upswings mean that investors were seeing a bottom and buying on the dip.  Two of these upswings actually put the Dow in the black for a short time.  Even as late as 2 p.m. the Dow was only down 160.  There is still great optimism for Q3 as the forecast remains at over 21 percent earnings growth so let’s just wait and see what happens tomorrow.  Volume again was quite furious with a huge 11.4 billion shares changing hands. 

S&P tumbles 3 percent as U.S. yields soar, investors shun risk

It was a day that was just down, down, down all day long for the Dow to end the session over 800 points down, its biggest one-day drop since the February correction. Not that this should have surprised anyone since there have been any number of days in recent months (years really) that the market has dropped 2 or 300 points in a single session before coming back before close.  It was only a matter of time before we had a day that it didn’t come back or, in fact, just kept going down.  Today was it, with investors finally divesting themselves of risky equities as a combined reaction to treasury yields rising, the uncertainties with the tariffs, and suspicions of over-valuations.  Today the Dow and S&P each lost just over 3 percent with the FAANG stocks, particularly Apple, leading the drag.  There are those who believe this is only the beginning of a correction that could go to 10 percent.  (Even at 10 percent, this would not be anything catastrophic.) But corporate earnings have had a way of erasing these uncertainties and Q3 reporting has not yet begun.  I’m more inclined to go along with today’s expert who said, “this could be an interesting buying opportunity.”  So who’s going to go to cash and stay out of it and who’s going to jump right back in and pick up some bargains?  Stay tuned.  Volume was furious at over 9.8 billion shares traded.  

Wall Street edges lower on global worries despite falling yields

The Dow may have ended a little lower today but that’s not the way most of the session went with the index seesawing back and forth like crazy, at one point down 160.  The sell off was triggered by the IMF reporting their forecast that the real sting of the trade war won’t be coming until 2019. Trump continued his tariff threats against China with the extra 267 B he’s been talking about for weeks which, if he did so, would bring the total of the most recent tariffs to nearly half a trillion.  The one saving grace, if it can be called that, is that bond yields fell which is why the market came back somewhat but still closed 56 down.  Today’s expert noted that the Chinese problem is casting a pall over the market as S&P companies get half their business overseas.  At 7.2 billion, volume was right in line with recent averages. 

Nasdaq drops for third day on global growth worries

It was another wild ride today with the Dow sinking 250 points by noon and then recovering in the afternoon session to close 39 points up.  With the continued slowing of growth in the Chinese economy the markets got nervous for the third straight day and sold.  Beijing is abandoning its very conservative cash reserve banking requirements in the hopes of stimulating more growth during the trade war, but with limited success as both stocks and the yuan have fallen.  The tech sector, which sells a lot to China, had another bad day falling 1.2 percent.  Google remains in trouble over its data breach, falling another 1 percent, but the embattled GE had a good day climbing 3.3 percent.  Volume remains vigorous at 6.9 billion but still a little below the 4-week average. 

Succinct Summation of Week’s Events 10.5.18 (plus history of the world in one shot)

Below please find the usual weekly summation with both the unemployment rate and jobless claims falling while factory orders rose. And thanks to Florence, non-farms employment increased by nearly 50,000 fewer jobs than expected.  The bonus this week is a fascinating graphic showing in one eye-shot the entire history of the world in a single geologic spiral time line.  And for those of you who want a good chuckle, check out Item 7 on the Sunday Reading List to see a brief history of the cost of computers from about 1970 on.  I have to disagree with some of the numbers though.  I purchased a Commodore in 1982 but it cost $2300, not $595.  I also purchased a Toshiba Satellite laptop in 2013 but for $600, not the $330 quoted here.  Hope everyone had a great weekend. 

Fidelity Is Thriving. Here’s What It Needs to Keep Thriving. - Barron's

On this rainy Saturday Barry Ritholtz has posted to his web site an article that should be of interest to all - this week's Barron's feature on the past, present, and future of Fidelity.  Since most of us are using Fidelity or a brokerage like them, this should pique our attention.  Since it is over 3,000 words, I am only including the first couple paragraphs below so click on the provided link for the full piece.  There are also some pretty nice graphics that will make looking at the whole piece worthwhile.  Enjoy the rest of the weekend, and for those of you who work for the post office or government, enjoy the rest of your holiday. 

Wall Street falls as solid jobs report boosts bond yields

I made a comment yesterday that a good jobs report today would likely ironically mean a bad day for the stock market.  That’s exactly what happened when today’s solid jobs report, ending a week of robust data, caused the Dow to suffer a second consecutive 3-digit loss, again losing almost 200 points.  And like yesterday the losses until about 2 pm were much worse, over 300 points, until a recovery late session.  The jobs report took the the 10-year Treasury to an even higher plane than yesterday touching nearly 3.25 percent, up from yesterday’s 3.23 which was then said to be the largest jump since the 2016 election.  There was a selloff over fears that money will begin moving out of the stock market and into bonds. But, of course, this is inevitable anyway when the market is suspected of being overvalued, which would be a natural consequence of the indexes at historic highs.  Once again, the FAANG stocks had a poor day which contributed heavily to the dip.  Investors are paying close attention.  But Q3 is right around the corner and if it goes as expected, all this will reverse itself.  Volume was quite brisk at 7.6 billion. 

Wall Street stumbles as bond yield climb continues

The day started with a modest 40 point loss on the Dow and just kept going south all day after that.  The difference between the session low and high was nearly 400 points before it recovered in the last hour to close down 200.  Today the problem was the climbing 10-year Treasury note reaching a seven year high.  Why?  The economic data is all very strong, which makes Treasury yields very attractive but also threatens stocks and stokes fears of inflation.  Jobless claims also fell to a 49 year low but tomorrow’s jobs report will tell the real tale.  If jobs are strong, the irony is that it’s more good news for the economy but bad news for stocks which suffer if there’s enough good news to justify more rate hikes.  One of the biggest drags today was that all the FAANG stocks did poorly, some like Netflix dropping more than 3.5 percent.  The good news is that, despite today’s so-called bad news, stocks remain near record levels.  For the second day, no volume data was included in this report. 

Financials lift Wall Street, but rate worry caps gains

It was another very good day on Wall Street with the Dow reaching a +175 by 2 p.m. on some very nice economic data including jobs jumping by 230,000 and the services sector hitting a 21 year high.  But then the index took a big dive again, maybe because of fears of more interest rate hikes beyond the one expected for December which today got rated at nearly 80 percent.  Nonetheless, the S&P came within striking distance of a new record and the Dow enjoyed its second consecutive all-time high despite the afternoon tumble.  Volume was not included in today’s report. 

Dow closes at record but Facebook drags on S&P, Nasdaq

With the news of a new trade deal with our North American neighbors, trade sensitive companies like Boeing and Caterpillar gave the Dow a big 3-digit boost for the second day, advancing the index 122 points.  Just like yesterday, it would have been a 175 point boost except that Facebook once again diluted trading as investors continue to absorb Friday’s news of still another major data breach, in fact this time its worst ever.  Still, the overall sentiment is that companies like Facebook are very solid and this latest crisis is being given the same weight as a simple case of the flu.  All the FAANG stocks were down over 4 percent in September and the small caps are also down, losing their appeal as safe havens from trade wars.  Volume was quite brisk at nearly 7.2 billion. 

NAFTA replacement deal lifts Dow, S&P; Nasdaq negative

Today’s deal for an all new NAFTA (now renamed USMCA) proved a real shot in the arm to the market, boosting the Dow nearly 200 points even though, as has been typical for this administration, the deal is very short on details.  Still, as today’s Wall Street expert stated, “the market seemingly doesn’t care.”  Of particular interest was a big boost to the ailing GE, and Tesla soaring 17 percent with the fraud lawsuit against Elon Musk settled.  Curiously, until about noon, the news was even better with the index up almost 280 and then slowly falling all afternoon when Facebook fell and took the rest of the Nasdaq with it.  Volume was right in line with the 4-week average at just under 6.9 billion.