Wall St slides, S&P 500 posts worst month, quarter since COVID outbreak

Okay, it was another big bath today as the markets were once again wracked by inflation fears and the budget wrangling in Washington. Since it was announced late yesterday that the Congress had reached a stopgap agreement to keep the government open until December, I expected a rally today. Not only did that not happen but, even after the bill was passed late this afternoon, the indexes only momentarily rallied before diving again, as we end the month with the worst numbers since early 2020 when the pandemic first hit. 

S&P 500, Dow gain amid inflation concerns, debt ceiling debate

The market came back a bit today with Fed Chair Powell commenting on continuing inflation. Yesterday, inflation spooked the market, but today taken as reassurance against too soon tapering. But the real issue keeping the market down is the debt ceiling debate going on in Congress as a shutdown looms on Friday unless there’s an agreement by then. A potential U.S. credit default is a scenario the markets don’t even want to think about.  With nerves fraying, volume remains above average at 11.4 billion. 

Wall Street swoons on rising Treasury yields, growing inflation worries

The indexes all took another real bath today. The markets are so funny, but I guess that’s what makes all this so interesting.  Just yesterday investors rallied over rising Treasury yields since they signaled confidence in the recovering economy.  Today those same rising yields sent everyone to the exits due to heightened inflation worries that are seen to hurt the big tech companies.  And tech took a huge hit today; in fact all the indexes dipped 2% or more with the Nasdaq heading for its biggest monthly decline in a year. 

Tech pulls Nasdaq, S&P 500 down as Treasury yields rise

Tech took another hit but cyclicals got a boost with the Dow up 71 points on the positive data of Treasury yields rising, indicating investor confidence in the recovery, and new orders for durable goods rising to a pre-pandemic seven-year high, again punctuating optimism in the recovery. The tech market leaders Microsoft, Amazon, Alphabet and Apple all took a hit. The S&P value index has been struggling against the tech index all year but has narrowed the gap this month as it continues to grow but may soon be snapping seven months of gains. Volume was a little above average at 10.3 billion. 

Best Stock Research Websites 2021

Every now and then I stumble upon an article that just contains some good old-fashioned useful information and this week that information came from a financial service called Gorilla Trades which published this article rating and evaluating the best stock research sites.  

Financial Risk Management 101

An investor can never get too much of an education on risk management and this week's WealthTrack program on PBS tackles this critical subject with a primer presented by Rick Bookstaber, one of Wall Street's top risk officers, having been the Top Gun for the University of California's huge network of pension and endowment funds as well as behemoths like Morgan Stanley and Salomon Brothers. It should be a terrific 24 minute review.  Enjoy the weekend.  

Wall St near even, dragged by Nike 6% drop after warning

After two days of intense rallies the markets took a breath today and traded near break-even.  The sentiment seems to be that there is “a pronounced trend toward recovery in the market” and as today’s expert put it, “There’s plenty of things to worry about but, bottom line, short-term rates make putting your money in cash unattractive, and bonds seem riskier at these levels than stocks.” Evergrande missed its interest payment deadline but the markets seem to be shrugging this off now.  Volume remains below average at 9.0 billion. 

Indexes close up more than 1% as investors assess Fed news

It was another big rally today as investors continued digesting yesterday’s Fed statement and feeling relieved that it was not going to be nearly as draconian as feared. The markets no longer seem concerned over Evergrande which announced that the debt payments would be made even though the actual investors very much doubt it. Nonetheless, compared to a couple days ago when a default seemed to threaten a global depression, those fears have now gone. Even bad reports of sluggish business activity and a rise in jobless claims could not keep buyers at bay as it was all expected. After three days of the S&P below the 50-day MA, today it was above and has now recouped half of its recent losses.  The 3 day breach was the first since March. Volume is still a little below average at 9.8 billion. 

Wall St ends higher as Fed signals bond-buying taper soon

Even though the Fed issued a statement today that rate hikes and tapering may be sooner rather than later, all the indexes bounced back today, mostly due to consensus that tapering may not be nearly as aggressive as feared.  Evergrande has been negotiating with its bondholders and says it has a deal to make the interest payments that are due on Thursday. The S&P has regained 25% of the losses from the last few weeks.  Volume was a little below average at 9.9 billion. 

Wall Street ends near flat on cautious note ahead of Fed

The Dow was up nearly 350 points in the morning indicating that investors were already shrugging off the impending default of China’s Evergrande. Then it started gradually sinking again with all three indexes closing at about break-even. If Wednesday’s Fed meeting goes as expected, it should calm the markets again. Meanwhile, having never heard of Evergrande before yesterday, I took a quick look at their numbers for the last 11 years and what popped right off the page was their enormous debt. After that there was their extraordinarily thin profit margins which have shrunk 90% in the last ten years.  

Wall Street ends sharply lower in broad sell-off

There was a sharp downturn in all the indexes today which at least in this Reuters report is attributed to the feared collapse of the Chinese company Evergrande and that it might bring the entire global market down. (Am I the only one who's never heard of Evergrande before today?) There’s also the usual nerves over Wednesday’s Fed meeting but I guess the best analysis came from today’s expert at Wells Fargo, “I guess it’s the China news but it’s not altogether surprising given how bullish people were.” In other words, it’s a fragile market and any scary event can bring it all down. 

4 Growth Stocks, 4 Value Stocks to Buy

Given the current market reality that there are swings on practically a daily basis between value and growth (value on the days recovery looks good, growth when it doesn't), this week's edition of U.S. News Invested seems to be just what the doctor ordered.  To be properly diversified, buy both.  And here is a list of the best of each.  Hope everyone enjoyed this beautiful weekend.  More of the wet stuff on the way this coming week.  

The Ugly Truth Most Trading Gurus Don't Want You To Know!

Markus Heitkoetter has a website I occasionally check on (and anyone can check on it just by signing up for his occasional emails). The email I received this week was too good not to share, a link to a 15 minute YouTube video that talks about all the characteristic differences between good traders and bad traders, I think well worth a look.  He also gives a bit of a review on Turtle Trading, plus several useful links.  Enjoy the rest of the weekend.  

Wall Street closes rollercoaster week sharply lower

It was risk-off today as all three indexes took a major dive in the face of the week’s difficulties (tax hike worries, Delta, Fed tapering etc) as today’s Consumer Sentiment data came in weak, validating that Delta could slow growth. (Amazing that in the last two days sentiment was exactly the opposite.)  The obvious problem of course, as reported by the University of Michigan, is that Americans are postponing purchases until inflation calms down, not at all unreasonable, and certainly not something that was unforeseen. Materials and utilities, ordinarily considered the safe sectors, took the biggest hit. The good news is that, due to triple witching, nothing that happened today can be taken as anything but fiction as all data and the reactions thereto get grossly exaggerated. That also explains the enormous increase in volume to 15.5 billion.  We’ll find out on Monday what really happened.  (Knowing that this witching effect takes place each quarter, I’m always amazed that the genius analysts on Wall Street aren’t able to back out of these distortions and tell us what happened. Why do we always have to wait until Monday?)  

S&P ends modestly lower as rising Treasury yields offset robust retail data

It’s funny how on Yahoo News they blame today’s tepid market performance on disappointing data. Perhaps the article was written too early in the day as the indexes were taking a big bath in the morning but then, as Reuters reports, the  retail report showed robust consumer spending keeping the economy growing, and   it all came back with only modest losses at close. The consensus is that the fears of a “massive slowdown in the economy is not materializing.” Volume was close to the 4-week average at just under 9.4 billion. 

Wall Street gains as crude price surge, strong economic data prompt broad rally

It was another big buying day sending all three indexes soaring, the Dow up 236 points. More data is showing that inflation has peaked and the recovery remains robust.  The good news is that everyone is moving back to cyclicals, the best indicator of confidence in the recovery. But today something unusual happened.  Growth stocks did well too, the best indicator that investors are ready to take on more risk. No volume data was included in any Reuters reports today but, per the CBOE, 10.2 billion shares traded hands. 

U.S. stocks close lower on worries over recovery, corporate tax hikes

Yesterday, despite bad news (the likely corporate tax hike), the market zoomed up, maybe because it was a bargain hunt. Today, despite good news (the CPI and Fed both confirming that inflation was not as bad as feared and is likely transitory), the market took a dive, maybe because it took a day for the tax fears to sink in. Or, as today’s expert put it, “the market is simply ready to go through an overdue correction.”  All three indexes dove, the Dow 292 points, and the S&P is down nearly 2% this month but still up 18% for the year. (And the good news about the corporate tax hikes is that they are likely going to be less than feared.)  Volume was again close to a billion above recent averages at just over 10 billion. 

S&P 500 snaps losing streak with tax hikes, inflation data on horizon

Despite the bad news about an expected corporate tax hike with the new budget, investors rushed back into the market today snapping losing streaks on both the Dow and S&P, the Dow hiking 261 points.  The move back to cyclicals typically means recovery optimism but the real test comes tomorrow with the consumer price index report and later still with retail sales and consumer sentiment. Or, because of the drop in the last week, could this just be investors picking up bargains? Regardless, there was a lot of activity today with volume being a good billion above recent averages at 10.3 billion. 

Gold & DeFi: A Conversation

We haven't talked about gold for quite a while so I couldn't resist when I found this article Friday on the Big Picture web site in which my guru Barry Ritholtz makes a pretty strong argument against using gold as an investment. I still agree that any sound portfolio should have between 5 and 10% precious metals (and gold is my favorite precious metal) in it as a hedge, but he provides an interesting different perpsective.  It's a short article (though after reading it, I still don't know what he means by DeFi) and for once the graphics translated in the copy and paste so you don't need the link, though I provided it anyway.  Hope everyone enjoyed the weekend.  

‘Guaranteed income’ preferred over ‘annuities’

For your weekend reading, I submit the following short article that I resurrected from last month's "Investment News" regarding annuities. I've never been a big fan of annuities even though most every senior I know has one and loves it. They love the guarantee that they will never lose a cent and they love the absolute guarantee of an income stream the annuity will give them the rest of their life, income they can completely depend on. 

Wall Street ends down, Apple sinks on app store ruling

For a fifth consecutive session investors have taken flight, today triggered by an unfavorable court decision on Apple, the biggest gain in producer prices in 11 years, and the Cleveland Fed prez casting more doubts on the dreaded tapering. But no worries says today’s expert. “The market is taking a breather,” evidenced by the fact that most of the losses were in the last two hours. But today’s losses even extended into the safer defensive sectors of utilities and real estate. In fact, they were the top decliners, losing more than 1% each.  For the week, all three indexes lost between 1.6 and 2 percent each. The S&P is still up 19% for the year. Volume was above average at 10 billion. 

Wall Street ends down after jobless claims hit 18-month low

A good jobless claims report sent investors back into worry mode over whether the Fed will scale back the accommodative policies after all and thus triggered an exodus in all three major indexes, including the Dow with its cyclicals that are supposed to be the best bet when we see signs of an improved recovery. Of course, it’s no secret that the hindrance in job growth is due to labor shortages and not cooling demand but that seemed to make little difference. As today’s expert put it, “The problems with the market these days is it’s rotating more than it’s moving.” Volume was a little above average at 9.3 billion. 

Wall Street ends lower, weighed down by Big Tech

Today even the so-called bullet-proof tech, the sector that just yesterday the experts were saying “don’t have your reopening worries,” could not save the market from being spooked about the economy’s uncertainty as all three of the major indexes took a hit.  Today our expert is saying, “Investors are pulling petals from a daisy – the economy will grow, the economy won’t grow.”  I think this guy is right.  And St. Louis Fed prez Bullard threw another monkey wrench in the works by saying the Fed should move forward and trim the pandemic stimulus.  The Dow and S&P took the smallest hits but it was nothing less than panic on tech with an 87 point drop in the Nasdaq.  Volume was a little above average at 9.5 billion. 

S&P 500 ends down, Big Tech lifts Nasdaq to record

With Morgan Stanley cutting its rating on the entire U.S. stock market to “underweight” and warning that the next two months could be “bumpy,” there was a mass exodus from cylclicals and back to tech which as today’s expert put it with the uncertainty over COVID, “you don’t have your reopening worries about those [tech] companies” sending the Dow and S&P down and the Nasdaq to another new record. Still, the S&P remains at a 20% gain YTD and the Nasdaq at 19.  And as we are just three weeks away from the end of Q3, the first forecast is out – a 30% increase in earnings vs the 96% from Q2.  Now let’s patiently wait over the next weeks and months as we see that projection steadily increase, as it always does.  Volume was right in line with the 4-week average at 9.2 billion. 

Why America has 8.4 million unemployed when there are 10 million job openings

Happy Labor Day!  I thought it most appropriate, in light of Labor Day, to share this very insightful 2500 word analysis from last week's Washington Post as to the current labor market situation and how we evolved towards this odd situation of 8.4 million unemployed amidst a market with 10 million openings. 

EMERGING ESG INCOME OPPORTUNITIES

For your Sunday night viewing pleasure I give you this week's edition of PBS' WealthTrack which once again explores the so-called ESG (Environment, Social, Governance) niche of the market for those who are socially conscious about their investments. Consuelo interviews Kristin Ceva who examines the ESG sector in terms of the opportunities it presents relative to buying debt in emerging markets.  

BEST INCOME STRATEGIES IN A LOW-YIELD ENVIRONMENT

For this weekend I am posting the next big Eastern Michigan AAII chapter webinar entitled "Best Income Strategies in a Low Yield Environment" to be presented September 28th at 7 pm by Marvin Appel, Ph.D.  As usual, preregistration is required and a link to do so is at the bottom of the post.  Have fun with it.  

Tech drives Nasdaq to record finish but Wall Street mixed on jobs report

With a disappointing jobs report with just 235K new jobs added vs an estimate 750K, investors rushed back into tech which, as today’s expert put it “has become bullet-proof. It’s the anti-COVID sector” and once again out of cyclicals with the sentiment that Delta is indeed having a negative impact on the labor economy and sending the Dow down 74 points. With the labor market being key for the Fed, it meant the Fed would likely further hold on the timing of tapering, which the market wants.  Yet there is some skepticism that perhaps the Fed has erred and that possibility is being priced in, quite a change from yesterday when the experts expressed great confidence in the Fed.  Volume was a little below average at just under 8.4 billion. 

S&P, Nasdaq edge to record closes, energy stocks buoyant

With unemployment claims falling last week, investors were once again reassured that the recovery was going on schedule and thus there was a little pullback from tech as everyone jumped back into cyclicals and boosted the Dow 131 points. Regardless, all three indexes ended in positive territory which put both the S&P and Nasdaq close to records again. The most persistent issue remains whether any of these new reports might impact the Fed’s timing on tapering but the general consensus is that the Fed is doing a good job communicating its intentions. Volume was a little above average at 9.2 billion. 

Tech stocks send Nasdaq to fresh record close, boost S&P

Today was pretty much a repeat of Tuesday with the markets continuing to take a breather and moving only modestly with investors pulling a little more out of cyclicals and a little more into tech with the good news from Jackson Hole about continuing low interest rates.  But two defensive sectors, real estate and utilities, still came out on top.  Disappointing data today was far less hiring in August than expected and factory employment at a nine month low. Good news is that manufacturing activity picked up which sort of contradicts the low factory employment numbers. But it does point to a critical issue – everyone will be watching carefully next week’s report on job openings.  Volume was above average at 9.8 billion.