Wall Street ends lower, weighed down by Apple

No one has ever accused Wall Street of being rational and today this was quite in evidence with all three indexes plunging despite glowing Q1 reports from the tech giants which, paradoxically, sent each of the stocks down.  And it was all because of “a sense that maybe next quarter (Q2) is as good as it’s going to get.”  303 S&P companies have reported with 87% topping estimates. Consumer spending rebounded in March as American spent their stimulus checks.  The Nasdaq has had six months of consecutive gains, the Dow three.  Volume was 10.7 billion. 

Facebook fuels S&P 500 to record high close

After diving right into the red all morning, the Dow zoomed way up 239 points right after the noon hour. Though no reason was given on this timing, I can only guess that it was at noon that Facebook announced its stellar Q1 results which propelled it to its biggest single-day gain in five months and sent both the S&P and Nasdaq to the upside as well.  With Amazon turning in its glowing report after the bell, can we surmise there will be still another run up tomorrow?  Over half the S&P has now reported in with 87% topping estimates. This has caused the Q1 earnings estimate to once again be revised to the upside, today to a whopping 45% vs yesterday’s 39% vs 25% a few weeks ago. And the market was really nervous about that 25% being way overly optimistic.  Investors may finally now be buying it.  Volume has finally caught up to the 4-week average, today at 10.5 billion. The S&P has gained 12% YTD, the Nasdaq 9 percent. 

S&P 500 ends lower after Fed holds steady on rates

There is some confusion today as to how the Fed’s remarks impacted the market. Some say the statement refusing to reduce support for the recovery sent the message that there is still considerable uncertainty in the air; yet the charts show that the indexes all rose after the announcement. Google reported record profits and now investors await results from Apple and Facebook. Despite the dip today, analysts have again raised the Q1 earnings forecast. Now it’s 39%, up from 35 yesterday and 25 a couple weeks ago. Volume remains a little below average at 9.5 billion. 

Wall Street ends mostly flat ahead of earnings wave

Yesterday the market was excited about what was expected to be a glowing report from Tesla. When Tesla’s report disappointed, it sent everything tumbling and all three indexes closed at near break-even.  Microsoft, the other big tech to report today, also disappointed while Google jumped. Apple, Amazon, and Facebook are all due later in the week and all eyes are waiting on those.  Despite the day’s disappointments, the Q1 earnings forecast has once again been bumped up, today to 35% vs yesterday’s 34.3% vs 25% from a couple weeks ago. Consumer confidence has also jumped to a 14-month high.  Volume today was just a tad below average at 9.7 billion. 

S&P 500, Nasdaq close at record highs ahead of tech earnings wave

A small drop in the Dow, a big jump in the Nasdaq as optimism over Tesla’s Q1 due tomorrow pushed more investors once again into tech. And, of course, starting Tuesday we will be getting reports from the biggest of the tech giants constituting 40% of the S&P’s capitalization. As of today, one-quarter of the S&P has reported in with 85% topping estimates. Q1 earnings growth has once again been upped, today to 34.3 percent.  Per the CBOE, volume remains below average at just under 9.7 billion. 

Succinct Summation of Week’s Events for 4.23.21 (plus Crypto Explosion)

The week's verdicts are in, the main positives being over 200 million U.S. vaccinations and jobless claims falling. The main negative is vaccine hesitancy (and I won't even count the ridiculous panic caused by the proposed 43% capital gains tax rate since no one believes it'll ever happen.)  The bonus this weekend is yet another look at a topic I am completely mystified by but has been a hot topic for quite some time now -- that is cryptocurrency. This week's edition of the PBS program WealthTrack dives into it some more, particularly since it's been going through the roof.  I'm hoping this provides some small clarity to an investment I don't understand at all and consider extraordinarily risky. Anyone who does understand it, more power to you.  Hope you all had a great weekend.  

ESG Clarity

With Earth Day this week, there has been a flood of articles in the financial media about the ESG stocks (Environment, Social, Governance). Last weekend I posted the first article critical of ESG that I had ever seen as published in Investment News. Well, it's not quite accurate to say it was critical of ESG so much as critical of brokerages being less than totally transparent in their promotions of these stocks. This week, Investment News has published several more articles putting the whole ESG issue in perspective. I am supplying below links to what appear to be the best of the lot.  Happy reading and happy weekend.  

Wall Street rallies on strong economic data; tech in focus

Yesterday there was a lot of stupid panic selling over a tax proposal that has no chance of passing. Today the smart money picked up a lot of bargains and both value and tech did very well, the Dow up 227, the Nasdaq 198.  Though there remain Q1 jitters, as today’s expert points out, “We’ve seen actual reports beating these very high expectations.”  And the VIX actually fell 10% today from a level that was already pretty low in a sign that these jitters may well be fading. Next week will be big with the total market capitalization of the big tech companies that will be reporting accounting for a full 40% of the S&P. So by this time next week, the markets will have a much better handle on Q1, the earnings forecast for which has been raised again, today to 33.9 percent. 

U.S. stocks close down on news of Biden tax proposal

Now this is dumb.  This is just really dumb. Everything was going peachy all morning, then suddenly right around noon all three indexes crashed. This was in response to Biden’s announcement of his proposal to raise the capital gains tax rate to the same as ordinary income for those who earn more than a million per year. What’s dumb is that no one believes this has a chance in hell of getting passed, or as today’s expert put it, “If it had a chance of passing, we’d be down 2,000 points.”  But that did not stop a whole lot of dumb people from panicking. Or as noted below, “When a proposal is floated about raising taxes or capital gains, everybody gets excited, sells first and asks questions later.” Well, it will present a good opportunity to pick up some bargains. Unemployment claims have dropped to a one-year low suggesting subsiding layoffs and there remains strong expectations for huge April job growth. Q1 earnings forecast has been raised again, today to 31.9% which many investors believe is way unrealistic. Volume today was very close to the 4-week average at 10.3 billion. 

Wall Street rebounds after two-day decline; Netflix slides

After two days of panic selling due to jitters over too much Q1 optimism, today was another day of tide reversal picking up bargains and switching back to tech, though frankly all indexes had a good day with both value and growth doing very well. Netflix was the one wild card today as, with the pandemic slowing down new programming as it has, subscriber growth fell in Q1 bringing the stock down 7.4 percent and putting a drag on an otherwise energetic market. The VIX again fell below 18 suggesting the market is shrugging off the COVID spikes. Volume was again below average at 9.2 billion. 

Wall Street closes lower as virus spike hits travel stocks

It was another big down day across the board triggered by more jitters over Q1 optimism. This time investors are taking a jaundiced eye toward last week’s stellar bank reports and suspecting that the earnings have been exaggerated so Q1 may not be going nearly so well after all.  Or could it be that with the huge spikes in COVID worldwide that panic selling ensued with the transportation and travel sectors taking a big COVID hit? Or could it be with everything go so well that we’re still seeing more profit-taking? At any rate, today saw an exodus into defensive stocks (utilities, consumer staples, real estate and healthcare) and out of financials and energy. The bottom line is, as today’s expert put it, that despite all the vaccination progress and recovery hopes, “We’re not out of the woods yet.” Despite all this, the Q1 earnings forecast has been raised once again, today at 31.5% vs yesterday’s 30% vs last week’s 25%.  Volume was considerably up and, at 10.2 billion, much closer to the 4-week average. 

Wall Street slips off record highs, Tesla drops after fatal crash

After flying high for weeks, all three indexes took a dip today, the most reasonable explanation being simple profit taking. But everything still leans toward the upside since consumers currently hold $2 trillion in savings positioning the economy for a big boom. There remain jitters over the huge 25% forecasted jump in Q1 earnings, which today added more jitters when analysts raised the estimate to 30 percent. So there will be no calm until there are sufficient Q1 reports to justify this optimism. Thus volume remains considerably below average at 9.8 billion. 

Succinct Summation of Week’s Events 4.16.21 (plus Shortcomings In ESG)

Below is the weekly summation, the main positive that 40% of Americans have now been vaccinated, the main negative that there is still a startlingly high percentage of Americans refusing to vaccinate. But overall economic data remains positive though consumer sentiment is below expectations at 86.5 for April so far. The bonus this Sunday night is an article from this week's edition of Investment News providing the other side of the ESG coin. I have presented several promotions for the so-called socially conscious stocks in recent months, mostly from U.S. News Invested, but this article discusses the downside. Hope everyone had a great weekend.  

Lessons From How Professionals Invest Their Money

All the books on success, not just successful investing, have one theme in common. Find someone who is doing what you want to do and then do what they do. In that spirit, the weekend reading I am proposing this time comes from a recent AAII posting of an article on learning how to invest by doing investing the same way that professionals do. So enjoy the following read.  It might also behoove you to click on the supplied link as there are a number of useful reader comments that I have not pasted below but are in the original article.  Have a great weekend.  

S&P 500, Dow hit record highs on bank earnings boost

For the third day, the big banks have turned in stellar Q1 reports, today with Morgan Stanley announcing a 150% jump in profits, putting both the Dow and S&P at new records. The Nasdaq also gained a few more points putting it now less than 1% below its all time February record. The Dow and S&P have now had gains for four straight weeks and interest rates remaining low have revived demand for tech. No volume data was included in the report below but the CBOE reported 10.1 billion shares traded, still below the 4-week average. 

Dow hits milestone, S&P breaks record high on tech rally

It was another great day for value stocks as the Dow zoomed 305 points to another record above 34,000 for the first time with two more of the big banks, B of A and Citi, turning in glowing Q1 reports. Tech also had a very good day with the Nasdaq up 180 points and recovered to less than 1% below its February record. Also helping the markets was a report of a jump in March retail sales as people begin spending their stimulus checks and jobless claims falling more than expected, now at a one-year low. As there is still a lot of fence-sitting over Q1, volume remains below average at under 10 billion. 

Wall Street ends mixed despite bumper big-bank earnings

Yesterday it was everyone moving out of value and into tech. Today it was everyone moving out of tech and back to value. This has been the seesawing trend day by day for some time now. Today Q1 got started with a bang with Goldman Sachs and Wells Fargo turning in stellar reports. At first the indexes soared, then doubts filtered in.  “So the question becomes how do the bank stocks rise more from here.”  There are enough jitters out there that even today’s great news got taken as bad news. Even JP Morgan Chase’s shares fell despite their earnings jumping four-fold.  Whoever said the markets are rational?  In the last fifteen years, there has certainly been plenty of evidence to the contrary.  But Q1 is only getting started. Volume remains way below average at 9.5 billion. 

Tech stocks push S&P 500 to record close, buoy Nasdaq

It was another day moving from value to tech as the markets brace for the beginning of Q1 reporting on Wednesday and as concerns over the J&J vaccine and inflation more or less got shaken off, opening the gates for more growth buying.  Though the CPI rose by its most in over 8 years, the consensus is that it will only be a brief period of higher inflation. And the 10-year note being pushed further down enforced more lack of concern over a possible bump in interest rates.  Investors remain steadfast in their faith in a full economic recovery. The Dow fell 68 points while the Nasdaq rose 146 but, as has been the trend lately, volume was very light, in fact again one of the lightest for the year. Though the VIX is at a 14 month low, today below 17, trading was way below average at 9.3 billion. 

Wall St ends lower as investors await earnings, inflation data

It was another seesaw day on all the indexes as the Dow dropped 135 points in the morning recovering to break-even around noon. Then dropped again about the same in the afternoon, recovering to close down 55.  The jitters are coming from Q1 expectations with the big banks reporting as early as this Wednesday and with skepticism that the biggest quarterly earnings gains since 2018 may not happen. Investors are again looking to Q1 for validation of valuations. But optimism is improving that the banks will turn in good reports and as today’s expert put it, “banks are going to return to normal.”  In one of the lightest trading days of the year, volume was again way below average at just 9 billion shares. 

Succinct Summation of Week’s Events 4.09.21 (plus John Oliver on the National Debt)

Below is the weekly summation, the main positive being the gains in the markets brought on by an accelerating recovery, the main negative that the worst yet COVID spike threatens the entire recovery. (But at least from my point of view, I'm happy to announce that I finally received Dose #1 of the Pfizer vaccine this afternoon!!!)  Your bonus this Sunday night is a 23 minute video in which comedian John Oliver explains how the national debt really works and that it's not really a bad thing, something my econ professor in business agreed with.  It's a 23 minute mini-course well worth checking out for perspective for those who believe any kind of debt is a bad thing, something that any business school prof would disagree with. Hope everyone enjoyed the weekend.  

Day Trading Antithesis

Once again I am offering for your weekend reading the latest segment of Consuelo Mack's WealthTrack program on PBS. Thursday's episode is on the subject of speculation and the guest offers an antithesis to speculation by promoting the case for long-term fundamental investing. Enjoy the program and enjoy your weekend.  

S&P 500, Dow climb for third day and close at records

The markets continued moving forward with inflation over the economic rebound being tamped down by the Fed and a continuing pullback in the 10-year note encouraging more buying in growth. With producer prices having their biggest gains in nearly 10 years, the Dow advanced nearly 300, the Nasdaq 70. Bank of America reported that more money has been pumped into equities in the past five months than in the past 12 years. But all eyes are on Q1 reporting now and the fear of a big disappointment as the banks begin reporting next week. Thus there’s a lot of fence-sitting and volume remains way below average at just 8.7 billion. 

S&P closes at record on tech boost as U.S. Treasury yields retreat

With the 10-year note backing further away from its recent high and reaching its lowest level since March 26^th, it was another day of migrating from value to tech with the Nasdaq gaining another 140 points, now just 2% off from the February record. Trading has tapered off in recent days due to concerns over Q1 earnings being overly optimistic so volume remains way below average, today at just 9.2 billion.  But the banks start reporting next week. Then the games will begin. 

S&P closes slightly higher after Fed minutes feed stable rate view

It was a seesaw day with the Dow in the red almost a hundred points and then in the black almost a hundred points before plunging again and closing nearly even. The same happened to both the Nasdaq and the S&P as investors remained skeptical that the Fed would hold interest rates low but that’s exactly what they did and exactly what they said they were going to do so it really shouldn’t have surprised anyone.  But it did.  The 10-year note rose a bit but still below its 14 month high and the Fed’s long track record of transparency didn’t seem to make any difference for the jitters. The main source of jitters now is the considerably optimistic projected 24.2% increase in S&P Q1 earnings. Many investors feel that these sharply increased expectations will lead to disappointment. This also explains why volume remains way below average, today at just 9.4 billion as the markets take a wait-and-see stance. 

S&P 500 slips but closes near record level

The mood shifted away from value and back towards growth and tech for most of today’s session even though most of the gains were brought down to even by the nerves of whether the very optimistic S&P Q1 profit forecast would actually become reality. Stock prices are reflecting an expectation for a recovering economy sooner rather than later and there remains uncertainty about that even though the VIX has now retreated to pre-pandemic lows. Volume remains considerably below average, today at merely 9.6 billion. 

Strong economic data lifts Dow, S&P 500 to record closes

It was another booming day on Wall Street with all three indexes shooting way up, the Dow and S&P at records, the Nasdaq now just 3% below its record, up from 5% last week.  With a lot more new jobs than expected being added in March and the yield on the 10-year note remaining in check, there was a huge buying spree across all sectors, value and tech included. Volume remains below average at 10 billion.  This is below even the reduced averages of the last 4 weeks indicating there are still a lot of buyers on the sidelines, still a lot of room for more upward movement.  

Succinct Summation of Week’s Events 4.2.21 (plus Purposeless Capital)

Happy Easter and here's the weekly summation for this shortened week.  The main positive is 154 million doses in the U.S. (though still not one for me yet); the main negative is the fall of Archegos Capital, which is also the bonus article for this week as it illustrates the flaws in mismanaged capitalism. The bonus also provides a rare philosophical perspective on the whole purpose (and yes, also purposelessness as the title suggests) of money.  Hope everyone enjoyed the holiday.  

Global Value Challenge

For this second night of this Easter holiday weekend, I submit this week's edition of Consuelo Mack's WeathTrack program. It's only appropriate that since yesterday's post examined the issue of over-valuations, that tonight we look at the other side of that coin -- the longtime continuing challenge of the valuations of the global markets. For this segment, she interviews Matthew McLennan, head of Global Value at First Eagle with $100 billion under management. Happy Easter everyone!  

Some Valuations Are Too High

For this holiday weekend, I will be presenting some different perspectives on market issues that have been very much under discussion in recent weeks and months.  For tonight's submission, I give you below the April 1st article from AAII regarding a concern that has been on many investors minds -- Are market valuations too high?  Enjoy the read and enjoy the holiday.  

S&P 500 rides Microsoft, Amazon to record close above 4,000

For the first day of Q2 it was a booming day for all three indexes, the Dow going straight up right out the gate and continuing straight up all day to gain 171, the same with the Nasdaq for a gain of 233 and so too with the S&P making history by breaking 4,000 for the first time. The lifts all came from the tech sector which, even though they remain behind the value stocks during this rotation, are now coming back. Unemployment rose last week but so did manufacturing hitting a 37 year high with factory employment the most robust in three years.  The Nasdaq remains 5% below its February record but that’s an enormous improvement from a month ago. The VIX sank below 18 for the first time in 14 months indicating virtually no fear out there anymore, which will also certainly help with the recovery. The markets are closed for Good Friday so going into the Easter weekend (and spring break), volume was very light at 10.5 billion.