The Wisdom of Wall Streeters

For those who are interested, the AAII will be hosting a Zoom webinar on value and growth strategies on Monday afternoon at 2 p.m.  Since the value and growth sectors have been playing tug of war for quite some time now, this should be an excellent lesson on how to combine the two for maximum portfolio profit potential.  As always, preregistration is required and a link for doing so is provided below.  Hope everyone is enjoying this very summery weekend.  

Wall Street rallies, weekly losing streak continues

It was another whipsaw day with the indexes reaching a peak around noon, the Dow up almost 500 points, then sinking in the afternoon and dropping almost 400 points by 2 pm only to have another surge to gain the 400 back and close 466 up.  What lies beneath this very up day?  As today’s expert put it, “a recognition by investors that the sell off is overdone. Some of the beaten-up quality names are really rebounding sharply.”  As the experts have been saying all week, this has all been an emotional rollercoaster since the fundamentals remain strong and it took a week like this one with four consecutive reports saying inflation has peaked that finally got a rational reaction today. 

Wall Street whipsaws, S&P closes lower on worries of prolonged inflation

All three indexes were going down, down, down most of the session.  The Dow dropped nearly 700 points from its 11 a.m. high to the 3 pm low, then rocketed up 500 points in the final hour to close down 103 points. Speak of whipsaws!  Today’s expert summed it up, “These wild swings of upwards of 2% up or down are extremely rare, and showcase a very fragile investor psyche.”  The problem is they haven’t been rare in the last couple of months. 

Nasdaq falls more than 3% as U.S. inflation data gives little relief to investors

The CPI inflation data came in just 0.1% higher than expected and the smallest gain since August suggesting, as investors had hoped, that inflation may have peaked.  But it was still not enough to calm nerves, not enough to placate concerns that inflation will remain a long-term issue, so the panic selling continued with another sharply down day, the Dow down 326, the Nasdaq 373.  As today’s expert put it, “The market is trying to make sense of whether we’re also going to see growth pullback more than expected as the Fed raises rates.”  The Dow’s decline is in its fifth day, the longest streak in three months and the S&P is down 18% from the January high. The good news is that value is still strongly outperforming growth, growth down 2.8% today, value down only 0.5%.  Thursday there will be more inflation data via the Producer Price Index.  Volume was again huge at nearly 15.4 billion. 

S&P 500, Nasdaq end higher in choppy session as inflation data looms

Extreme volatility was once again the order of the day with the Dow swinging back and forth several times between a 350 or so point loss and a 500 gain before diving into negative territory again to close down 84 points. The Nasdaq’s ride was even more dramatic enjoying 300+ point gains twice and twice also near or just below zero before closing up 114.  Once again the up and down was triggered by a variety of factors including the Fed, Ukraine, the supply chain and China. As today’s expert once again reiterated, “It’s just fear-based selling.”  All eyes are on Wednesday’s CPI report on inflation with the hopes it will show that inflation has peaked. Volume was again way above average at nearly 15.5 billion.  

S&P 500 ends below 4,000 for 1st time since March 2021; growth shares lead decline

It was a third day of irrational selling as investors continue to doubt the Fed’s ability to tame inflation and the fears of future rate hikes stoking even more inflation and even recession.  And of course there is also Ukraine, the latest increases in COVID, the supply chain, and now China’s slowdown. It was another massive drop from opening bell on, 653 points on the Dow and 521 on the Nasdaq.  The S&P fell below 4,000 for the first time in 14 months and is now down over 16% for the year. The sell off has been most concentrated in tech and growth, the stocks expected to be most seriously impacted by rising rates. Volume was enormous at just under 15.3 billion. 

New Bond Era

This WealthTrack program from March 24th fell through the cracks while I was doing just weekly updates but given the events of the past week, it's more relevant than ever here in mid-May.  It's all about how the rising interest rate environment has reinvented the bond market and how we can still find a suitable place for bonds in our portfolios.  Enjoy, and hope everyone enjoyed this beautiful weekend.