Financial Paradigm Shift

My goodness, speaking of a paradigm shift, that's certainly what we got yesterday when Amazon fell through the floor.  So I thought it right on target that Consuelo Mack would devote this week's WeathTrack program to this very topic and bringing in Richard Bernstein to shed light, one of the market's foremost gurus.  Enjoy the broadcast and enjoy the remainder of the weekend, though it may be quite wet. But that's an appropriate metaphor for how the market is doing.  

Wall Street slides to deepest daily losses since 2020

Yesterday’s big rally was caused partly by anticipation of glowing Q1 reports from Facebook and Apple. I don’t know how Facebook did but Apple not so well and Amazon just terrible, hitting a near two-year low.  Thus there was another huge rush to the exits with the S&P having its largest one-day decline in nearly two years and the Nasdaq in 19 months. The Nasdaq has lost 13% in just this one month and the S&P 13% for the year so far. As today’s expert put it, “Ahead of the weekend and the Fed meeting next week, people are clearing the decks.” 

Wall Street ends sharply higher, lifted by Meta and Apple

All three indexes started the day with very modest gains and then about 11 a.m. took off like a shot for the rest of the session, the Dow rising about 700 points before falling a little in the final half hour to close up 614.  The main trigger was both Facebook and Apple rallying ahead of what’s expected to be glowing Q1 reports.  Today’s strong gains on the Nasdaq still cannot mute the fact that the index is down nearly 10% for the month, the biggest one month decline in two years. And the S&P has swung wildly back and forth in the 2% range 32 times in four months compared to just 24 times all of last year.  And reports that GDP unexpectedly shrunk in Q1, the first decrease in two years.  But none of this bad news seemed to matter a lot today as finally the glowing results of Q1 have taken center stage with 81% of 237 companies beating estimates.  Corporate America’s underlying fundamentals are strong and this has given hope today that the GDP contraction may not be that worrisome. Volume was a tad above average at 12.3 billion. 

S&P 500 ends higher, supported by Microsoft

After dropping 130 points mid-morning, the Dow zoomed up some 600 points by 1 pm and then began a steady descent for the rest of the day to close up 61 points.  The other indexes pretty much followed suit. Microsoft and Visa triggered the rally with strong Q1 reports before the fears of Fed actions with interest rates once again took over and a poor report from Google finishing the job.  Q1 continues to go very well with one-third of S&P companies having now reported and 80% beating expectations.  Volume was a tad above the 4-week average at 12.1 billion. 

Nasdaq tumbles to lowest close since late 2020

After yesterday’s moderate rally over the Musk takeover of Twitter, the market went back to business as usual and took a big dive once again.  Yesterday the Dow was down about 500 points before the Twitter news hit.  Today reality took over again and the Dow sunk 809 points or roughly the same place it was about 3 pm Monday. The trigger was same old, same old – Fed worries, inflation worries, China worries blah blah blah. The rush to the exits was also undoubtedly influenced by bad reports from Google, Microsoft and Apple, all portending the negative impact of inflation on the entire tech sector. 

Nasdaq ends sharply higher after Twitter agrees to be bought by Musk

All the indexes heavily in the red until late in the session, the Dow down almost 500 points, until a late session rally triggered by the news of Musk buying Twitter giving a 238 point boost to the Dow and 165 to the Nasdaq which in turn extended across all of the tech stocks. Uncertainty prevails with China continuing the big slump and European stocks falling on fear of more restrictions from China.  One-third of the S&P will be in for Q1 by the end of this week and, as of today, one-fifth has reported with 77.5% beating estimates vs an historic average of 66 percent.  So there may be good news in the near future as today’s expert put it, “Earnings are going to be crucial to the mindset of the average investor.”  The VIX hit 31.6, its highest reading in a month. Volume was right in line with the 4-week average at 12.8 billion. 

A Final Reminder: "Buyable Gap-Ups" Webinar this Tuesday

A final reminder that the AAII Eastern Michigan Chapter will be hosting a webinar on Buyable Gap-Ups this Tuesday at 7 pm.  It is free but preregistration is required and a link to do so is provided below.  Hope everyone had a great weekend and enjoyed this summer-like weather while we have it.  It looks like it goes back into the 50s on Monday.  

Four Strategies for Fighting Inflation

With the headline inflation figure hitting 8.5%, today's investors are facing a challenge they haven't seen in 40 years. With this in mind, below is a special edition of U.S. News Invested outlining four strategies for beating inflation.  Enjoy the weekend and this lovely "June" weather.  

Wall St slumps as weak earnings, rate hike clarity spook investors

What a straight shot down, all three indexes dropping more than 2.5%, the Dow down more than 2.8% in the biggest one day fall in 18 months and the third straight week of losses.  Exaggerated swings have become more common of late with half of April’s trading days rising or falling by more that 2 percent.  As today’s expert put it, “That not normal, but that’s just how things have been for such a long time now.” To what do we owe all this “not normal” trading? Well, yesterday’s comments from Fed chair Powell have sent the market reeling with his allegedly “new” support of “front-end loading” to tame inflation. It seems to me that he’s been advocating this for some time now and what’s changed in recent days is that the dovish Fed members have now begun coming around to his side.  

Wall St ends down as Powell plops 50 bps rate hike on table

Dow up 330 points right out the gate but then immediately began a steady decline to lose it all shortly after noon and then another 368 points by close, a total of nearly an 800 point loss for the day from the opening high. So the headline is misleading. The downward trend in the indexes started well before Powell made his remarks about the ½ point hike that was being discussed for May. And why would that have been a surprise when Mary Daly said yesterday that a ½ point hike for May was very likely – and yesterday the Dow went way up. 

Nasdaq drops as Netflix subscriber numbers weigh on tech

Last night I left off with the question of whether the market today would be more focused on IBM doing well or Netflix doing badly. Well, with Netflix being a FAANG stock with all the discussion all these years about what happens to the market if one of these really heavy hitters goes south, it should go without saying that the market was much more focused on Netflix today which, after last night’s after-hours report of their historic and enormous loss of subscribers, that both Netflix and the market would go south.  And that’s what happened.  

Wall Street advances on earnings optimism, dovish rate rise remarks

All it took was a couple of good Q1 reports to shoot all three indexes way back up, today to the biggest advances in a month. And as is sometimes the case, the market digested one hawkish comment from one Fed prez and two dovish comments from two other prez and decided to ignore the hawk and focus on the doves, thus shooting the market up even more.  Another contributing factor was the 10% of S&P companies that have now reported with nearly 80% beating estimates vs the historic average of 66 percent. Trading volume remains below the 4-week average at 10.5 billion.  …

Wall St ends lower as investors await further earnings cues

What a rollercoaster with the indexes swinging back and forth between black and red throughout the session, the Dow being up some 170, then down some 170 before all three closed down modestly, the Dow down 39 points.  But due to the holiday week volume remains low and investors are on the sidelines awaiting more Q1 reports and evaluating the impact of Ukraine, inflation, and China’s COVID policy on company financials. Does clarity come from earnings? China? The Fed? As today’s expert put it, “It’s going to be some time before either one gives us any clear direction.” 

Fed's Courage

The big question that has been discussed in the financial press for quite some time now is as follows:  Can the Fed rein in inflation without triggering a recession?  And do they have the spine to do what has to be done to tame this inflation?  These are the questions that get a focus on this week's WealthTrack on PBS.  Use the links to watch the program.  And Happy Easter everyone!  

8 Great Fixed-Income Funds to Buy for 2022

Yesterday I presented a chart showing how badly bond funds are doing of late.  Today I present the flip side - an article boasting of 8 solid bond funds that pay yields of 2-3%, far better than CDs and not too terribly lower than stocks if safety is what you're looking for.  As always, click on the link if you want more detail on the individual funds.  Enjoy the holiday weekend.  

The Worst Quarter in Years for Bond Fund Investors Had Few Bright Corners

It's Good Friday so the market was closed. And it's closed for Easter on Monday too.  That's four straight days of no market.  Goodness, with everything that's going on, the world may be a very different place come Tuesday.  Meanwhile I haven't shared anything from Barry Ritholtz and his Big Picture blog for some time now so tonight I will share a chart he posted today showing how bond funds have taken a beating during Q1.  And tomorrow I will share the flip side of this story with an article from U.S. News Invested showing 7 bond funds that have done remarkably well and are recommended for buying for 2022.  Stay tuned.  

U.S. stocks slide as rising bond yields hit growth stocks

The Dow spent much of the day up around a hundred points as late as 2 pm before it once again plummeted to close down 113.  Just as rising Treasury yields caused markets to dive earlier this week, and subsequently falling rates triggered yesterday’s rally, today’s rise again pressured the indexes into a fall.  Four more big banks submitted Q1 reports today and despite them beating estimates they also reported steep profit declines. So not as steep as expected but still steep enough that created concerns that they only beat estimates because expectations are so low.  

Wall Street surges in growth stocks rally; earnings season opens

Bond yields fell today and that sent an army of bargain hunters racing to pick up fallen growth stocks sending not only the tech heavy Nasdaq but also the value heavy Dow into a big rally.  Q1 got off to a mixed start with JPMorgan reporting disappointing results but Delta Airlines and the entire airline index surging.  Ordinarily strong business would be considered a good thing but in this environment good business is being triggered by too strong demand which business can’t keep up with and thus triggering the unprecedented inflation we have.  As today’s expert put it, “Business is good. Almost too good.”  But perhaps the day’s most telling news is that in only one day of Q1 reporting, the 2022 forecast has already been downgraded from yesterday’s 6.1% growth to 5.4 today.  Volume remains below average at 10.5 billion. 

Wall St reverses gains, closes lower as aggressive Fed actions loom

Dow up over 350 points until about noon, then slow declines until 2 pm when it dropped 200 points until just b4 close, then climbed to close down 87.  In the beginning, there was obviously some profit-taking going on.  Then it all came crashing down when one of the most dovish Fed members issued yet another blunt statement about the need for aggressive Fed action against inflation, once again reiterating the fears of more rate hikes than the market is expecting and sending everyone once again to the exits.  Also Tuesday’s CPI report, even though it came in exactly as forecast at 8.5%, the hottest in four decades and the biggest monthly jump since 2005, also reinforced the rush to the exits.  As is almost always the case just before earnings season, volume remains below average at 11.2 billion. 

Wall Street stumbles as surging Treasury yields slam growth stocks

As is often the case during a shortened holiday week, investor sentiment has become risk-off, especially in light of Treasury yields shooting to a 3-year high and sending all three major indexes into deep negative territory, the Dow losing over 400, the Nasdaq nearly 300.  All eyes will be on Tuesday’s CPI report for signs that inflation may have crested, but the estimate is for an 8.5% hike in consumer prices over last year, the highest since 1981.  Ukraine is also prompting the flight to safety with full expectations of a huge new Russian offensive coming soon.  Q1 reporting begins later this week with a forecast of 6.1% earnings growth, down from the 7.5% forecast in January.  Volume remains below average at 11 billion. 

“THE FUTURE AIN'T WHAT IT USED TO BE: BUYABLE GAP-UPS”

To end the weekend, here's a heads-up for the next AAII Eastern Michigan Chapter virtual webinar to be held two weeks from Tuesday, April 26th.  The topic by presented Paul Townsend is identifying and buying gap ups in this very uncertain market.  Since it is virtual, there is no fee but preregistration is required, a link for such provided below.  Hope everyone had a great weekend.  

Top Stocks to Buy in All 11 Market Sectors

Since I've started the daily posts again, I figured I may as well do the weekend bonus posts as well, especially in view of the fact that these weekend specials quite frequently got the highest number of views.  So below is the latest edition of U.S. News Invested, this time with a list of 11 top quality stocks, this time with the #1 stock in each sector.  Enjoy and enjoy the weekend.  

Dow gains, S&P 500 ends lower as market weighs Fed rate hikes

It was a day of flight from growth stocks and migration towards value as investors prepare for more aggressive rate hikes which are expected to negatively impact the tech sector.  As today’s expert points out, “Growth is overvalued and value is undervalued.”  The prospect of recession weighs on the market with the Fed hikes expected to either “engineer a soft landing with slowing but positive growth” or lead to a sharp slowdown.  The big banks which report their Q1 earnings next week are expected to show a large decline.  Volume was considerably below the 4-week average at just under 10.4 billion.  Volume will likely continue on the light side until Q1 reporting is well underway. 

S&P 500 ends higher, lifted by Tesla

All three indexes were down all day long until about 3 pm when they recovered to just above break-even.  The Dow was down as much as 300 points in the morning, the Nasdaq down some 200 around noon.  It all boils down to continued cautiousness and that the volatility that has been so much a hallmark of the market for so long now is expected to only get worse with all the uncertainty surrounding Ukraine, the economy and the Fed and whether recession can be avoided.  The forecast is now for an 89% likelihood of a ½ point rate hike next month.  With Q1 reporting to begin next week, as today’s expert put it, “As we get into the heart of earnings season, I expect volatility to be very prominent.” Volume continues below average at 11.5 billion. 

Wall Street ends lower after Fed minutes

Dow down almost 400 points as late as 2 pm but then recovered to close down 144.  The Nasdaq got it worse, also down more than 400 points but did not recover nearly as nicely.  It was all on account of the release of the Fed minutes which confirmed what Lael Brainard said yesterday about the likelihood of the Fed getting considerably more aggressive in cutting its balance sheet.  Brainard’s comments yesterday were a bit of a shock as she is considered one of the more dovish members and perhaps investors were hoping today’s minutes would prove she was being overly pessimistic.  

Wall Street, tech shares stumble on fears of aggressive Fed

After a couple of big winning sessions, all it took was another comment from the Fed that more aggressive balance sheet tightening was very likely on the horizon in order to make monetary policy more neutral. The comments brought back the January panic over recession and brought the indexes crashing down again, with both value and growth being hit hard.  The Dow closed down 280, the Nasdaq 328.  The irony is that just yesterday the experts were suggesting that Fed tightening would boost the growth stocks again and today they’re saying it’s “certainly having a negative effect on equities” due to concerns over recession.  Same exact scenario, two polar opposite conclusions.  

Tech, megacap growth shares boost Wall St; Twitter surges

 Thus I begin my daily posts again.  We'll see how it goes.  

All three indexes had a straight-up trajectory when the news broke tht Elon Musk had acquired a 27% share in Twitter making him its largest shareholder and giving a big shot in the arm to the entire growth sector which gained 1.7 percent. For the fourth time in six sessions the yield curve has remained inverted which could be predicting a recession but is also putting a premium on growth stocks again. The S&P, which has been down more than 12% earlier this year has now recovered most of those losses and is now down only 4 percent for the year.  The Russian genocide of civilians in Ukraine has galvanized world opinion to likely take additional steps against Moscow.  Volume remains below the 13.5 billion 4-week average, today coming in at 11 billion.   

Market summary for w/e 4/1/22

Below are the individual market summaries for each day of this past week ending 4/1/22.  This will be the last time I do a weekly update.  It is obvious it is not working to be publishing a list of summaries only once per week.  I don't know if I will succeed or not but, starting tomorrow, I will endeavor to return to the original format and begin publishing my summaries on a daily basis.  My views have fallen drastically since I started this weekly format a month ago so let's see if returning to daily revives things.  I've discovered it really isn't any more time or work to do daily and may even be easier.  We'll see.  Hope everyone had a great weekend.  Hope to be online again tomorrow.