Virus outbreak, data stoke growth worry to drive stocks lower

A couple days ago it was reported that there was concern that the markets were not taking the coronavirus with sufficient seriousness and that would impact the market in the near future.  Well, the near future is now because today the market decided that the virus was a serious concern and started a sell off right out the gate that continued all day long and resulted in a 603 point loss on the Dow at close.  It was the worst day for the Dow and S&P in six months.  The positive news is that, though the CDC got into the act by issuing a quarantine on all Americans returning from China, the director also stated that the risk to the U.S. public was low.  Indeed when compared to this season’s flu outbreak, this virus is trifling.  Thousands so far have died from the flu.  However, because of China’s major position as a global player, economists do fear that the virus could have a big impact on the global economy and it is this fear that today triggered the 600+ point sell off.  Volume was extraordinarily brisk at over 9 billion shares traded. 

Wall Street reverses course to end higher after WHO comments

Wow, the whole market was over 200 points in the red almost all day until the last half hour when it suddenly rallied and not only recovered all losses but closed a rather impressive 124 points up.  Today the WHO, after hesitating for several days, took the step of declaring the coronavirus a global emergency stating that this unprecedented outbreak was being met by an unprecedented response.  This accounted for much of the sell off but, at some point, the market decided that the response was adequate and that the bad news was temporary and would get better.  As today’s expert said, “Precautions are being taken and that means at some point there will be a light at the end of the tunnel, that is when the market reacts constructively.”  Q4 also helped with the comeback with earnings expectations improving to the point that yesterday’s break-even has now been upgraded further to a 0.7% rise in Q4 earnings.  This is a complete 360 from a few weeks ago when the forecast was for a minus 0.8% contraction.  More than 7.7 billion shares changed hands which was slightly above the 4-week average. 

Stocks lose steam in wake of Fed statement

The market opened strong up over 200 points but then the Fed issued a policy statement citing uncertainties and the coronavirus and everything came tumbling down.  This is despite the fact that Fed policy remains status quo and the target rate remains in the range of 1.5% and 1.75%.  But investors apparently did not like the words “uncertainty” and “coronavirus” used in the same statement.  Analysts say one concern is that the market doesn’t seem to be taking the health crisis seriously enough so “the market seems to have gotten ahead of itself” which may not portend well in the near future.  But the Dow did close nearly even and the better news is that Q4 reports continued well enough to revise the earnings contraction from yesterday’s 0.4% to today’s break –even.  How soon will it become a positive number?  Volume remains below the 4-week average at 6.8 billion. 

Apple sparks Wall Street bounce ahead of results

With the WHO issuing a statement today that the coronavirus was being effectively stemmed by China, the three indexes soared today, the Dow to the tune of 187 points.  A statement from the U.S. HHS that new steps were in the works to counter the virus also helped boost confidence.  Q4 continues improving, the outlook now being upgraded to a 0.4% contraction in earnings (up from 0.5% yesterday and 0.8% last week) with 1/5 of the S&P now reporting and 68% topping expectations.  But the best news of the day is that consumer confidence, which has been credited for some time now as being the mainstay (even shall we say savior) of the economy, is still going quite strong and has in fact now hit a five month high.  And not just a five month high but, as the chart shows, way above even pre-recession highs.  Volume was a little below the 4-week average at 6.75 billion. 

Wall Street tumbles as virus fuels economic worry

The Dow lost 550 points in the morning, gained back about half of that in the early afternoon before dipping again and finally closing down 453 points, its biggest one day drop since early October.  The S&P had a similar outcome, the Nasdaq even worse, once again all over fears regarding the spread of the coronavirus when China extended its New Year holiday thereby validating worries that the disease was indeed impacting its economy.  Still, the experts continue to insist that it’s a just an excuse to sell off an overbought market and that the whole crisis is “way overblown.”  

Succinct Summation of Week’s Events 1.24.20 (plus more updating on behavioral finance)

Below is the usual summation for the week, the biggest positive that the impeachment is not really impacting the markets, the biggest negative that the impeachment is a national embarrassment.  (It will be left to the individual reader to decide whether it's the Democrats or Republicans who are responsible for this embarrassment.)  The bonus this Sunday is an article just posted yesterday on Barry Ritholtz's Big Picture blog (you can't get more up to date than that) on the latest in cognitive psychology and how that impacts decision making, a concept that can relate to investments or anything.  It is a 93 minute MiB (Masters In Business) interview with Stanford Professor Barbara Tversky and her new book "Mind in Motion: How Action Shapes Thought" detailing on how the 9 rules of cognition affect thought processes.  Hope everyone enjoyed the weekend. 

The human factor

Way back in the Stone Age while we were still meeting monthly as a group, we certainly spent our fair share of time discussing behavioral finance, pretty much agreeing that this emerging field would become the future of Wall Street.  With that in mind, this article that appeared in an issue of Investment News last week seemed particularly timely and appropriate and might serve as a useful refresher and update on what is going on in this very dynamic field.  Enjoy the weekend. It may be foggy and rainy and snowy and grey but at least we're not dealing with ice this time.  And that is a major blessing.

The S&P 500 has worst day since October as virus fears mount

For the third straight day the Dow has fallen and for the third straight day it is being blamed on the coronavirus.  Today’s turn was triggered by the WHO, who just yesterday said it was not yet a global emergency, stating today that it was “an emergency in China,” having now killed 26 people there and infecting more than 800.  Another major change is that the CDC has now confirmed the second U.S. case.  But as before, today’s expert calls the virus a mere excuse and that investors really see this record breaking market is being prime for taking profits.  74 companies have now reported in for Q4 and 68% have beaten estimates, prompting analysts to revise their earnings forecast upward to a 0.5% contraction, quite a change from the 0.8 just two days ago.  Next week will be big with stalwarts such as Apple, McDonald’s, Starbucks, Tesla, Amazon, Facebook, Boeing and Caterpillar expected to be reporting.  Volume remains high at nearly 8 billion.    

S&P 500 gains, Nasdaq hits new high as investors eye earnings, coronavirus

The Dow spent most of the morning more than 200 points in the red only to bounce back in the afternoon to once again break nearly even.  Once again, the coronavirus is being blamed for much of the skittishness even though the WHO has stated it’s too early to dial a global 911 on this thing.  Again, it’s more accurate to describe this flat market as an indication that investors are satisfied and comfortable.  Indeed, Q4 is giving everyone a good reason to be comfortable as more positive reports stream in and 67% of reporting companies continue to beat expectations.  Indeed, the only real mystery today is that bellwether companies like Travelers, Comcast, and Freeport-McMoRan turn in great reports but still had up to 5% drops in their share prices.  Volume remains above average at 7.5 billion. 

Tech sector pushes the S&P 500 to slight gain

Though the Dow opened the session 120 points up, it quickly caved in the rest of the day but managed to close down just 9.  Analysts have given the reason as continuing worries over China’s coronavirus, but it’s much more likely, as stated by today’s expert, that it’s a simple case of another kind of nerves.  “The market’s had a big run, that’s made some investors a bit skittish.”  Indeed, this has been a major concern for some time now.  How long can this bull keep running?  But with IBM turning in a great Q4 report and 67% of 58 S&P companies beating expectations, this bull still has legs.  Nonetheless, the soothsayers have returned to their pessimistic prediction of a 0.8% contraction in earnings for Q4.  Volume remains brisk at 7.2 billion. 

Wall Street falls as China virus reaches the U.S.

After spending the morning just very modestly in the red, the Dow took a serious nosedive at 1 pm closing 152 down on  the risk-added news of the coronavirus out of China and the IMF lowering its global growth forecast for the next two years.  But the mysterious virus was what triggered most of the rush to safer assets with travel and other China-related stocks being hit the hardest.  And it should come as no surprise that most of the reduction in global growth is being attributed to the damage done to the Chinese economy by the trade war and the ripple effects that has produced.  Q4 continues with roughly 1/10 of the S&P having reported and over 70% beating forecasts.  Volume was brisk at 8.1 billion. 

What was Martin Luther King, Jr.'s birth name?

The market is closed for MLK Day so I thought I would honor the occasion with a bit of trivia that was brought to my attention for the first time this morning. It seems that MLK's birth name was not Martin at all, but Michael, as was his father's. But, in 1934, when King Sr. took a trip to Germany for the worldwide Baptist convention, he became so impressed with and enamored by what he learned about Martin Luther, the leader of the Protestant Reformation, that he legally changed his name -- and his son's -- to Martin Luther King.  Hope everyone enjoyed the three day break from the market. 

Succinct Summations for 1.17.20 (plus Here are my major gaffes of 2019)

Below is the weekly summation, the big positive being that we have had yet another week where there have been new all time highs, the big negative being the possibility - or shall we even say likelihood - of foreign interference in the 2020 election. For your amusement this Sunday night, Barry Ritholtz has provided a confessional list of the major things he got wrong in 2019, chief among them being his prediction that trading commissions were already low enough and would not go lower, and that there would be no Brexit.  For those of you who work for the government or in banking, enjoy your holiday tomorrow. 

Mutual Funds That Rank High on Sustainability Are Outperforming the Market

A while back I ran an article about the ESG funds as a good way to invest in companies that are in line with your individual ethics, values, and politics.  But there have also been articles critical of the so-called ESG's, claiming that they might be a good way to make people feel good about their decisions but also citing studies showing that they consistently fail to provide returns commensurate with other funds.  This is why today's article on "The Big Picture" blog is so timely as it provides a listing of ESG funds that are actually top rated and beating the market.  So it may indeed be possible to make profits while still promoting your favorite causes.  The article is from Barron's so only the first paragraph can be had without subscribing but I'm sure some of you do.  Enjoy the rest of our snowy weekend. 

Wall Street hits new highs in strongest week since August

All three major indexes achieved still another round of new records, the Dow gaining a modest 50 points on reports of strong U.S. housing and sound data on China’s economy.  Home building surged to a 13-year high and overall data points both domestic and abroad are positive.  Because it was a thin day for earnings, analysts have suddenly changed the Q4 forecast from yesterday’s minus 0.4% to minus 0.8 % today which seems more than a bit premature given just one day’s data.  Volume was a little above average at 7.3 billion. 

S&P 500 blasts through 3,300 as tech stocks surge

Still riding the high from the signing of Phase I and adding to that a great Q4 report from Morgan Stanley and continuing data that the consumer that has been the mainstay of the economy remains strong as demonstrated by a strong retail sales report, the Dow surged right out the gate and stayed that way all day to close up 267 points, achieving still another new record as did also the Nasdaq and S&P.  The latter made history too by breaking 3,300 for the first time.  Whereas the forecast for Q4 has always been for a 0.6% decline in earnings, in just this short time into reporting the expectations are already being revised to a minus 0.4 percent.  Very likely this will be a positive number in a very short time, especially in light of the fact that full year 2020 earnings are expected to be a +9.6 percent.  At 6.9 billion, volume was in line with the 4-week average. 

Dow closes above 29,000 after China and U.S. sign trade truce

With China signing the Phase 1 trade agreement as agreed, both the Dow and S&P set new records, the Dow breaking 29,000 for the first time.  Though it is entirely possible there will be much disagreement over the Phase 1 deal once the details come out, the consensus remains that without it the market would be worse off and, with it, however it may be, it may open the door for increased capital investments which has been missing from the economy for the last few years. And though the Dow was up nearly 200 points through much of the session, it still managed to close 90 up, the sell offs late in the session due to disappointing Q4 reports from Bank of America and Goldman Sachs.  Volume was a little above the 4-week average at 7.3 billion. 

Wall Street dips from record in 'Jason Bourne market'

It was another day of profit-taking as the Dow moved up almost 150 points by noon before investors decided to take their bonuses and, given the fact that the S&P is at record levels at 18 times earnings, there was every good reason to sell.  Today’s expert calls it a “Jason Bourne” market as, just as in the fictional spy franchise, the time had come to look for an exit.  But the selling stopped well before break-even, with even 32 points to spare.  Q4 started with the big banks turning in glowing results which surprised no one given the strength of the current economy.  Analysts expect a 0.5% drop in earnings for the second consecutive quarter but, given the fact that they expected a 3.0% drop in Q3 and got 0.5 instead, if they’re expecting 0.5 in Q4, it’s a good bet that the number will be positive before it’s all over.  Volume was a bit above average at 7.3 billion. 

Wall Street hits record, boosted by trade and earnings optimism

Optimism reigns pushing the Dow up another 83 points and to new records on all the major indexes.  Q4 is next, which begins with the big banks reporting on Tuesday.  And the consensus is that Q4 will turn rosier in direct correlation to progress on the trade deals.  At 7 billion shares traded, volume was right in line with the 4-week average.

Succinct Summations of Week’s Events 1.10.20 (plus U.S. Cost of Healthcare)

Below please find the usual weekly summation, the positive being the killing of the Iranian general, the negative being the killing of the Iranian general.  Positives also included the unemployment rate remaining at 3.5% and the negatives also included payrolls rising below expectations.  As is often the case, the positives and negatives sort of cancel each other.  The bonus this Sunday is a very telling and instructive graphic illustrating healthcare costs in the U.S. and how it quite unfavorably compares to most other countries.  Hope everyone dealt with all the flooding okay this weekend. 

Part 2 of My Investing Resolutions for 2020

Last weekend I presented Part 1 of AAII's Charles Rotblut's investing resolutions for 2020.  Tonight I present for your weekend reading Part 2 of his essay which, like Part 1, is really a list of 11 more generally sound investment tips rather than anything specific to the current market environment.  Which is to say that generally sound investment tactics will work in any market environment.  Try to stay safe this icy weekend. 

Wall Street slips from records after jobs data, but posts weekly gains

After a week of record breaking sessions, investors took profits today triggered by an underwhelming jobs report that saw domestic jobs increased by 19,000 less than forecast.  Still, it’s a minor disappointment in view of the fact that the jobless rate remains at a near 50-year low of 3.5 percent and hiring is considered plenty strong enough to keep the longest economic expansion in history on track.  Despite today’s losses, the indexes are still positive for the week.  Volume was a little below average at just under 6.8 billion. 

Wall Street notches records on trade optimism, Apple gains

For a second day, optimism swept the markets with Trump refraining from further action against Iran and the Chinese confirming that a Phase 1 deal will be signed next week all pushed the Dow up triple digits again and to new records for all the indexes.  Q4 begins next week and the current forecast is for a 0.6% drop in earnings.  My guess is that, like prior quarters, will turn into a positive number before too long.  Volume was above average at 7.3 billion. 

Wall Street rises but ends well off day's highs amid renewed Middle East jitters

The Dow was up about 240 points until just before close when it dropped to 160 mostly on reports that there were no casualties in last night’s attacks by Iran in Iraq and that Tehran appeared to be standing down.  Still, celebration is premature as, after the bell, two more missiles were reported in Baghdad’s Green Zone.  As today’s expert said, “the market is going to react minute-by-minute” to the crisis.  Though global markets have been rattled, the good news is that, for the time being, war has been averted.  In economic good news, the S&P and Nasdaq both hit new intraday records and private payrolls jumped by more than 200,000 new jobs, well above forecast.  Volume was well above average at nearly 7.8 billion.  

Wall Street slips with investor focus on Middle East, but chipmakers climb

Caution on Iran sent the Dow down nearly 120 points in today’s session.  But then after the market closed there were the missile strikes on U.S. bases in Iraq in what Iran called a proportional response. So Wednesday will be critical with things either escalating or ending and the market responding accordingly.  Let’s hope there were no casualties.  Volume was in line with recent averages at 6.9 billion. 

Wall St ends up despite Middle East tensions as tech-related shares gain

The Dow dropped 240 points today before rebounding late in the session to close up 68.  This is being described in today’s commentary as “investors brushed asides worries” about Iran – but the hourly chart tells a different story.  At any rate, it’s premature to prognosticate about what this conflict may or may not do to the market.  It could be nothing. Or it could be very serious.  If Iran retaliates, it could be very serious indeed.  But as the commentary continues, “in the absence of any additional escalation, the market will end up shrugging its shoulders” and that is likely quite true.  But it’s a gigantic if.  Volume was above average at nearly 7.8 billion.  

Succinct Summation of Week’s Event 1.3.2020 (plus My Investing Resolutions for 2020, Part 1)

Below is the usual weekly summation, the positive (which according to 40% of those polled is really a negative bringing us much closer to war, the other 40 thinking it's saving us from war, the remaining 20 scratching their heads trying to figure out what the hell is going on) being the killing of the Iranian general, the negative that the China trade is not yet signed, thus remaining but an ephemeral hope.  The bonus this week courtesy of AAII is a list of Charles Rotblut's 11 investing resolutions for the year.  But as he states, these really have nothing to do with 2020 but rather just general sound investing advice, making this article another good concise primer.

S&P 500 snaps win streak as Middle East tensions push down Wall Street

I’m rushing off for the weekend so this’ll be shorter than usual.  The market has  been thrown into  a tizzy over the attack on Iraq and killing of the Iraqi general who was targeting Americans and the further threats of retaliation from the Middle East.  All told all three indexes took a substantial hit, the Dow down 233 points on above average volume of nearly 7.5 billion. 

Wall Street starts 2020 with new records on China stimulus, trade hopes

China’s move yesterday to reduce the reserves requirement for their banks was lauded by global markets as a major boost to equities which shot the Dow up a whopping 330 points registering it biggest gain in four weeks and putting the S&P at its 11^th record in three weeks and the Nasdaq its highest in three months.  The stimulus in China has bolstered optimism that 2020 will be a year of accelerated growth.  Volume was brisk at 7.6 billion. 

A Remarkable Year

For the New Year, I submit below a very comprehensive article from our friends at Heritage Capital Research about the remarkable 2019 proved to be for investors and some prognostications as to where we're heading for 2020.  Hope everyone had a great holiday!