Nasdaq retreats as Alphabet falls but Apple gains after hours

Yesterday it was reported that Alphabet came in after the bell and below forecasts.  That accounted for the nearly 180 point drop by 11 a.m., even dragging Apple down despite the fact that Apple had not yet issued its Q1.  Generally it was not a good day for tech but overall it was a decent day for everything else, even the perennially beleaguered GE which turned in a good Q1 and jumped 4.5 percent.  This and other impetus gradually pulled the Dow up in the afternoon session to close up a modest 38 points.  Then Apple turned in its Q1 after the bell and the stock immediately shot up over 4 percent.  Can we expect another rally in the morning?  Tomorrow concludes the monthly Fed meeting and with it should come the expected announcement of holding on interest rates for the rest of this year, which should also encourage a rally.  Volume was higher than average at 7.2 billion. 

S&P 500 posts high, extends 2019 rally; Alphabet falls late

Despite the S&P reaching another intraday record around 2 p.m., the indexes fell again quite a lot very late in session and the Dow ended the day just 11 points up.  The data was good – consumer spending up, inflation mild, China trade hopes high – yet, in the end, investors got back on the fence awaiting the next Fed meeting which begins Tuesday (for word on the expected decision of no 2019 hikes), plus a busy week of new Q1 reporting.  Alphabet came in after the bell but below forecasts.  Volume was below average at 5.8 billion. 

Stock Investing Strategies (a manual)

I once again submit an offering from AAII, this time this week's AAII Digest with interesting articles on this year's taxes plus a study on whether the infamous FAANG companies should be broken up along with a survey showing how AAII members themselves feel about this.  But of very special interest is the final article, "Stock Investing Strategies," which is not really an article at all but a link to a 144 page pdf book elucidating all the essentials about investing.  It is an excellent textbook, a great intro for newbies, a great refresher for veterans.  In case the link doesn't work, I'm attaching the pdf to the email I send to my regular subscribers.  Hope everyone had a great weekend. 

Six Questions With John Bogle

AAII is in the middle of a 25 day email marathon where they are resurrecting the best articles they've ever published.  A few days ago, they submitted this 2016 interview with the legendary late John Bogle, founder of Vanguard.  As I am an AAII member (they made me join after I was made Chair of the now legendary and late MRI Group, and I've kept it ever since), I took the liberty of copying the article in its entirety (even though that may not be entirely permissible) instead of sending a link which would be useless to any of us who are not members.  However, I think access to articles like this is a good enough reason for the nominal annual fee for joining the AAII.  Enjoy the rest of your weekend. 

S&P, Nasdaq notch record closes from GDP, earnings boost

The Dow opened 70 points down but then rallied all day to close 80 points up, so it wasn’t such a bad day with the added bonus that both the S&P and Nasdaq achieved new record closes.  The trigger today was that, despite the fact that the Atlanta Fed issued a glowing GDP report on Monday, it was today’s GDP number from the Commerce Dept that got everyone excited and has investors optimistic about continuing momentum and new highs.  Oddly, one of today’s experts opined, “Earnings season has been mixed but it’s been a net positive.” How has it been mixed?  An historically high percentage of S&P companies have beaten forecasts and the naysayers predicting a 2.5% contraction in Q1 earnings as recently as two weeks ago are now pointing to 1.4% growth excluding the problematic energy markets.  This is not mixed and it’s not a net positive. It’s a positive, period!  Among very strong Q1 reports were Amazon and Ford. Energy continues to lose due to the continuing problem of bloated inventories.  Marvel Studios have a huge hit in “Avengers: Endgame” that boosted Disney’s stock nearly 2 percent.  Volume again is in line with the 4-week average at just under 6.5 billion shares traded. 

S&P 500 nudges lower as industrials drag

One day we get good Q1 reports, the market shoots up. On another we get poor Q1 and the market tanks. The latter happened today with the Dow diving 134 points (down almost 300 at open!) with Intel, 3M, UPS, and Raytheon turning in disappointing reports. This was despite the fact that after close Wednesday Facebook and Microsoft turned in glowing reports, which should have caused another rally this morning but did not.  But as today’s expert points out, valuations are currently at a premium so investors are being wary. The good news – and it’s really good news – is that the forecast for a 2.5% earnings contraction for Q1 that had been so very prevalent up until two weeks ago and has in the past ten days been knocked down to just 1.1% yesterday, got reduced to zero on Thursday and there is now a new forecast for an amazing Q1 growth of 1.4%, if you exclude energy.  And we still have a long way to go in reporting season so that number is likely to keep going up.  When it’s all said and done, how far will the geniuses have been off?  Again, volume was in line with the 4-week average at just over 6.6 billion. 

Wall Street edges lower, energy stocks fall

The market spent most of the day in the red as investors took a breather from yesterday’s strong run and, in the face of some big companies reporting in tomorrow, sitting on the fence for a day with the Dow down 59 at close.  Neither other indexes were able to maintain the record highs reached yesterday. The good news is that both Microsoft and Facebook turned in good reports after close so that will be reflected in Thursday’s activity.  And Thursday Amazon and Intel also come in so it’ll be a big day.  Today, Texas Instruments, EBay, and Anadarko turned in good reports with Caterpillar, AT&T and Boeing not so much.  As of today nearly 80% of reporting companies have beaten estimates.  With today’s good news, the Q1 contraction forecast is now down to just 1.1% from 2.5% a couple weeks ago and we’re only one-fourth of the way through reporting season so it’s bound to keep going down.  Volume was close to average at just under 6.6 billion. 

S&P 500, Nasdaq hit record closing highs on upbeat earnings

It was another 3-digit boost for the Dow as a whole battery of major companies came through with Q1 reports that beat forecasts.  Among these were Twitter, Hasbro, Coca-Cola, Lockheed-Martin and United Technologies.  The S&P has today recouped all its losses from its September record high and is now at a new record high as is the Nasdaq.  The Dow itself is up 145 points and investors are pleased as today’s performance is considered a “very broadly representative day of the overall economy.”  Truly the only sector that suffered was predictably the traditional safe haven of consumer staples which is what everyone plows into when the rest of the market is sinking and, conversely, sells off when all is well.  The forecast for Q1 contraction has now been reduced to just 1.3%, down from 2.5% two weeks ago.  If things keep going this way, it'll be wiped out completely. Volume was a little above average at just over 6.7 billion. 

Wall Street near flat in quiet session ahead of earnings wave

Right out the gate this morning the Dow opened a hundred points down and was within a point or two of break-even by noon but then lost ground again to close 48 down.  The sentiment seems to be that we had a very good week last week and, given that there are several major Q1 reports coming this week plus that most traders are still out on break, everyone is in wait-and-see mode over what might happen in the next few days and that was reflected in the unusually thin volume of 5.8 billion.  One thing the market was waiting for was the Q1 GDP report to see if it was in alignment with the unexpectedly good Q1 earnings … and it was.  Q1 GDP expansion has come in at a glowing 2.8% vs a forecast of 0.2% last month.  That has everyone feeling much more optimistic about the remainder of Q1 reporting.  Bigger bets may now be coming sooner than later. 

Happy Easter - Investing For Impact

Happy Easter everyone!  I'm sending the blog out a little early today since, as this is supposed to be the season for charity, I thought I'd inform that many charities are offering matching programs this weekend so there's still time to give a donation if that's where your heart lies.  My favorite charity is Food for the Poor and it is offering 100% matches until midnight tonight.  That also goes along with today's theme of Investing For Impact, explained in detail in this week's PBS "Wealthtrack" about the familiar topic of choosing to invest in companies that are socially responsible, the so-called ESG sector (Environmental, Social, and Governance), and how to do it.  Plus, as the program points out, they can be as or more profitable as any other strategy. 

How To Trade During Earnings Season

For this holiday weekend and since we're in the midst of Q1 reporting, here is an article from Morpheus Trading that addresses an issue we have discussed before -- how to trade profitably on earnings reports.  It is a short enough read to be well worth the trouble.  Happy Easter! 

Aging Populations (or Age Discrimination?)

The markets are closed for Good Friday and so I thought I'd reflect on this most somber of days on a somber issue as posted today on Barry Ritholtz's Big Picture blog.  The graphic below illustrates the changing population, specifically how the prime working age group of 25-54 has shrunk over the last decade.  As you can see, the 54+ group has shrunk throughout most of the country except in the southeast sunshine states and the southwest, which are also very popular sunshine states.  But is the working age population really shrinking or are the 50+ set merely being forced into early retirement and are thus out by 54 and migrate to where it's warm to spend their senior years?  Is this really shrink-wrap or is it age discrimination?  I suspect the latter.

Wall Street closes slightly higher, industrials lead

Except for a very brief dip in the red mid morning, the Dow was straight up black today ending the session 110 points up with much robust economic data coupled with healthy Q1 reports.  March retail sales blew past expectations and filings for unemployment dropped to a 50 year low, plus optimism over China made for a very good day.  If 110 points seems meager for such good news, it’s because investors always have to have something to worry about and that something today is that Q1 is going so well that there is actually concern out there that these first great reports may have been intentionally front-loaded and there is bad news to come.  But now with 77 S&P companies reporting and 78% beating forecasts, the oddsmakers have now again reduced the Q1 contraction, today to 1.7 percent from 2.5 last week.  At 6.8 billion, volume was right in line with the 4-week average. 

Wall Street slips, weighed down by healthcare plunge

The Dow was back and forth all day long between 50 points down and 50 up due to a string of good Q1 reports and good data from China, but enough of a scare from the healthcare sector that things couldn’t get in the black and closed just about even all around.  Once again, Bernie Sanders is being held the culprit which brings the delicious irony that, though nobody seriously thinks “Medicare For All” has a chance, it’s got all these companies spooked.  The CEOs are probably not being smart by pushing back so hard for all they’re doing is needlessly creating controversy and as today’s expert points out, “Investors would rather invest in sectors that aren’t going through such a big controversy.”  Until it gets more than this token head of steam, the CEOs should just ignore it and, if they don’t, it’s to their peril.  Today we’re just over the 10% mark of S&P companies that have reported in for Q1 and nearly 80% have beaten forecasts compared to the 65% average since 1994.  The good news out of China is that their Q1 GDP grew 6.4%, better than expected.  Volume for once was above average at just over 7 billion. 

Wall Street edges higher on generally positive earnings

In today’s session the Dow was up about 140 right out the gate before it started a slide until 2 pm then regain ground to close up 67.  The good news today came from B of A, J&J, BlackRock, and United Health, all of which turned in Q1 reports that surpassed forecasts.  The financial sector came in strong but the healthcare stocks were troubled with Anthem and Cigna both sliding each about 7 percent.  BofA, the nation’s second largest bank, beat profit foecasts but missed their revenue numbers while BlackRock emerged the big winner not just blowing away forecasts but raking in $65 billion in new cash.  The really good news is that today the Q1 contraction forecast fell to 1.8% vs 2.5% last week and so far 81% of reporting companies have beaten forecasts.  Both FAANG giant Netflix and bellwether IBM fell after the market closed with its Q1 reports so there may be a drawdown on Wednesday.  Volume remains a little below average at just under 6.6 billion. 

Wall Street slips as bank earnings disappoint

Friday the market zoomed way up because of a single terrific Q1 report from bellwether firm JP Morgan.  Today a single disappointing report from another bellwether firm, Goldman Sachs, sent the Dow down a hundred in the morning and though good reports from Citigroup and China got things back to almost even, it wasn’t quite enough to overcome the news from Goldman Sachs and the general jitters that Q1 may indeed contract.  Thus the Dow ended the day 27 points down, with the other indexes also down.  But the good news was sufficient to decrease the Q1 pessimists from the 2.5% decline that was the consensus last week to a 2.1% decline today.  Eight major firms are turning in their Q1 results later this week so we’ll have a clearer sense then. Until then, volume remains light at just over 5.7 billion. 

Succinct Summation of Week’s Events 4.12.19 (plus Why You Can’t Beat the Market)

Below please find the usual weekly summation and the biggest positive is not even on the list, that of Friday's big rally after the glowing Q1 report from JP Morgan which brought all three indexes within a stone's throw of their all-time record highs.  Perhaps this summation was written before the market closed Friday.  The negatives too are fodder for confusion, with the Barr/Mueller report heading the list and the contradictory negative of job openings falling coupled with the positive of jobless claims falling.  For your bonus this Sunday evening I submit an article from the Palm Beach Research Group "The No. 1 Reason Why You Can't Beat the Market."  The title is a misleading tease because it's not about why you can't beat the market really; rather than "can't," it's about why you "don't" beat the market, that is the mistakes people make that prevent beating the market, how the experts avoid these mistakes, and how we can learn from these experts.  Hope everyone had a great weekend. 

All in the Family Debt

For your weekend reading I submit an article published a couple years ago by The Boston Review and resurrected last week on The Big Picture blog.  This article examines the common ground between liberalism and conservatism in the context of "Family Values: Between Neoliberalism and the New Social Conservatism."  As there has been no other time in recent history where the divide between liberal and conservative has been so aggravated (and I believe quite unnecessary) that the two sides can scarcely converse anymore, this essay impressed me as being particularly insightful from that perspective.  Enjoy the rest of the weekend. 

S&P 500 closes near record high as earnings season begins in earnest

As I’ve mentioned a number of times in recent weeks, investors have been on the fence awaiting the results of Q1 earnings since there’s been a general pessimism that Q1 will see a contraction for the first time in three years.  Well, today Q1 got a huge boost when JP Morgan Chase issued a glowing earnings report that far exceeded the forecast, giving not only a big 1.9% boost to the entire financial sector but a whopping 269 point boost to the Dow since JP Morgan is so important it is considered a bellwether for the rest of Q1 and the economy as a whole.  Today, investors’ fears of slowing economic growth and impending recession were allayed.  The S&P is now within a mere percentage point of its September record high and in this one day alone the forecast for Q1 has been reduced from a 2.5% contraction to a 2.3% contraction.  As more than 79% of reporting companies have exceeded forecasts, this contraction estimate will almost certainly continue to shrink.  With today’s boost, both the Nasdaq and Dow are now a mere 1.5% below their all-time record highs, the VIX has fallen to a 6-month low, and volume is much closer to the 4-week average at nearly 6.8 billion. 

The S&P 500 ends flat as investors await bank earnings

It was another wacky up and down day that settled at a near wash for the Dow and S&P as positive economic news could not overshadow continuing unsettled nerves over global slowdown and recession fears.  Again, investors are on the fence waiting for Q1 earnings and hoping that the forecast for a 2.5 percent contraction is overly pessimistic, as forecasts have tended to be in the past.  When more major banks report in on Friday, the market will have a better feel for this.  Healthcare stocks took a hit following Bernie Sanders submitting his “Medicare For All” plan to Congress, which surprised analysts since the bill is widely considered DOA.  And Bed, Bath & Beyond fell almost 9% after it rose 8% after close last night when they put in their Q1 report, and then the report turned out to be bad news.  Evidently, the buying last night was based on not having yet actually read the report.  While the market stays in wait-and-see mode, volume remains considerably below average at just 6.0 billion shares traded. 

Wall Street ekes out gains as investors shrug off Fed minutes

It was kind of a quiet trading day with the Dow down about 50 points around 10 a.m. and then up around 50 points around 3 pm to finally close up just about even.  The Fed minutes reaffirmed the “patience” policy and that’s what everyone was expecting and Q1 got underway with Delta, Levi Strauss, and Bed Bath & Beyond putting in good reports but industrials being weighed down by Boeing.  Since Q1 earnings beating the pessimistic forecast is critical to turning around the recession fears, everyone is waiting anxiously for more Q1 and thus volume remains considerably below average at 6.1 billion. 

Wall Street drops on U.S. trade tensions with EU, IMF global outlook

It was another day of a severe market reaction to a Trump statement – this time the announcement of a potential new trade war with Europe. That plus the impending messy Brexit led the IMF to further cuts its global growth forecasts and that sent everyone running to the exits dragging the Dow down 240 points before it eventually settled at 190 down at close. The good news is that all of this can change in a heartbeat if Q1 reporting contradicts the expected 2.5% contraction in earnings. Delta is due Wednesday and two major banks on Friday. As everyone awaits Q1 results, volume remains below average at 6.3 billion. 

S&P 500, Nasdaq edge higher as earnings season looms

On the up days like Friday, the market puts aside the “r” word; on the down days, recession is right back in the news again. Analysts are expecting a contracting Q1 so when a few industrials like GE dropped today, investors regressed to sell mode, dropping the Dow almost 200 points before recovering to close 83 down.  And a slowing growth narrative plus the question of recession is back on everyone’s mind.  Volume remains below average at 6.1 billion. 

Succinct Summation of Week’s Events for 4.5.19 (plus INVESTMENT SUCCESS SECRETS)

Below is the customary weekly summation, the positives being that the market seems to be once again stabilizing and the fears of recession that were raised a couple weeks ago have now abated.  The negative is that, even though the positive column revealed higher than expected payrolls, the negative column shows lower than expected new jobs? Can they both be right?  The bonus this Sunday is the latest edition from WealthTrack on PBS, this week's program revealing "Investment Success Secrets" from Gotham Asset Management.  The 30 minute program is available on the WealthTrack/PBS website.  As an additional note, I would also like to comment that tonight's episode of 60 Minutes had a very informative interview with investment genius Ray Dalio of Bridgewater Associates, who has also been interviewed a number of times on WealthTrack.  The CBS/60 Minutes web site will likely have the program available for streaming in a week or so.  Hope everyone enjoyed their weekend.

Will Stocks Always Outperform Bonds?

For your weekend reading, I submit below one of this week's articles from the AAII evaluating the long-term performance of stocks vs bonds.  Since so much of our emphasis has always been on the FastTrack strategy of short-term trading of bond funds, I thought this would be particularly relevant.  It is a particularly good technical analysis of the superior yields that stocks deliver in the long run over bonds. 

S&P posts seven-day winning streak as jobs data allay economic fears

It was a fairly steady day on The Street today as the Dow rose 40 on news that payrolls had risen by 196,000 new jobs in March vs a forecast of 180,000, now putting the S&P just 1.3% from its October record high (vs 1.75% yesterday vs 2% the day before!)  That pesky yield curve that had everyone panicky about recession has reversed itself and continues to steadily widen with the 10-year at 2.51% and the 3-mo 2.42%.  With today’s job numbers, the recession question has been taken off the table and investors feel more confident and still optimistic about a trade deal with China.  Q1 reporting kicks into higher gear next week with the major banks reporting in and volume remains below average at 6.2 billion. 

S&P 500, Dow advance with trade talks in focus

Today the S&P came near a six-month high (also the record high, now only 1.75% short vs yesterday’s 2% short) and the Dow was on an uptrend all day with continued optimism over China, Boeing getting a lift from Ethiopian investigators, and Facebook recovering from yesterday’s latest scandal. Also lifting the index was a good labor report showing jobless claims at a 49-year low (wasn’t it just yesterday that the market got hit by fewer new jobs in March than forecast?) But the real deal comes tomorrow with the non-farm payrolls report.  All in all, the Dow closed 166 points up and volume remains below average at 6.3 billion. 

U.S. chip stocks surge on trade deal hopes, Wall Street edges up

It was another wild ride today with the Dow crashing in the morning only to be up over a hundred at noon and then crashing again all afternoon but rallying at the very end to close up 39 points.  The rising and falling tides were attributed to an influx of both good and bad news, good news on China and the chip index, bad on economic data with optimism over trade just barely winning out.  Among the bad news was the services sector coming in at its lowest since 2017 and new jobs in March also below estimates.  Facebook also took a hit with the report that millions of users private records were inadvertently made visible to the public.  But the S&P gained more traction, now just 2 percent below its record high.  Though volume remains below average, today it was just a little below at just over 7.2 billion. 

Wall Street treads water after rally, Walgreens slumps on profit warning

After yesterday’s stellar rally, the market took a breather today spending most of the session down around 130 but came back to close down 79.  Just as yesterday’s impetus was good news from China and re U.S. manufacturing, today it was bad news about U.S. manufacturing leading today’s expert to categorize today’s trading as “mixed signals.”  Also the first Q1 report came from Walgreen’s with a disappointing slump and though this was balanced by good reports from the airlines, it didn’t make the difference.  Investors are still looking to Q1 for the first decline in earnings since 2016, expecting a 2% fall.  Volume was below average again at just under 6.5 billion. 

Wall Street rallies on upbeat China, U.S. manufacturing data

For April Fools Day the market got a big surprise that was anything but foolish. It seems all the gloom and doom about China’s slowing economy was a bit overblown as today Q2 got started with positive numbers from China, easing global growth concerns. That combined with the S&P closing just 2 percent below the record high from September sent the Dow up a big 329 points.  And it turns out that U.S. manufacturing numbers were also looking better than expected. Additionally the yield curve inversion which ended on Friday reversed even more so today hitting a one-week high and now starting to unwind the gloomy outlook.  But investors are still bracing for Q1 earnings to be down 2 percent from last year.  We’ll see.  The pattern has been for gloomy earnings forecasts and then the reporting pleasantly surprises.  Volume remains below average at 7.1 billion.