Stock market today: Wall Street steadies after its worst day in nearly 2 years, and stocks are mixed
Updated: 9:13 AM CDT Aug 6, 2024
MOMENTS. BACK TO THE BREAKING NEWS FROM WALL STREET. THE DOW ENDING THE DAY. MORE THAN 1000 POINTS DOWN AT THE END OF TRADING. THAT, COUPLED WITH SOME RECENT DATA COMING IN ABOUT THE JOBS NUMBERS NOW ADDING THE WORD RECESSION BACK INTO THE CONVERSATION. SO JOINING US LIVE RIGHT NOW IS CHUCK ZADA, WHO IS THE MANAGING PARTNER, CHIEF INVESTMENT OFFICER AT ARMSTRONG ADVISORY GROUP BASED OUT OF MASSACHUSETTS. CHUCK, IMPORTANT STUFF GOING ON ON THIS MONDAY. SO LET’S GET RIGHT TO IT. SO THIS BIG DROP NOW LEADING TO SOME INVESTORS SAYING TO THE FEDERAL RESERVE, OKAY, MAKE SOME EMERGENCY CUTS TO THE INTEREST RATES RIGHT NOW. BUT IF THAT WERE TO HAPPEN, WHAT ARE THOSE IMPLICATIONS ON THE MARKETS IN THE DAYS AHEAD? YEAH, I’M NOT SURE THAT WE’RE AT THE POINT WHERE SOMETHING LIKE THAT NEEDS TO BE DONE. TYPICALLY, EMERGENCY RATE CUTS BY THE FEDERAL RESERVE ARE A TOOL THAT THEY EMPLOY WHEN THERE’S SOMETHING SIGNIFICANTLY WRONG WITH THE ECONOMY, USUALLY IN KIND OF THE PLUMBING OF THE ECONOMY, COMPANIES CAN’T BORROW THE CASH, CAN’T MOVE AROUND THE FINANCIAL SYSTEM. THOSE ARE THE TIMES WHEN YOU TYPICALLY SEE SOMETHING LIKE THAT. AND SO, QUITE HONESTLY, I THINK THAT IF YOU WERE TO SEE THE FEDERAL RESERVE GO IN THAT DIRECTION, IT MIGHT ACTUALLY EXACERBATE THE ISSUE THAT WE’RE SEEING IN MARKETS, BECAUSE MARKET PARTICIPANTS WOULD LOOK AROUND AND SAY, HEY, IS THERE SOMETHING THAT THEY KNOW THAT WE DON’T? IS THERE A REAL PROBLEM HERE? BECAUSE TO THIS POINT, YES, WE HAVE SEEN SOME WEAK ECONOMIC DATA OVER THE LAST 6 TO 8 WEEKS THAT HAS RAISED THE CAUSE OF, YOU KNOW, RECESSION AS A POTENTIAL CONCERN IN THE UPCOMING QUARTERS. BUT I JUST DON’T THINK THAT A POTENTIAL RECESSION IS SOMETHING THAT YOU DO IN EMERGENCY RATE CUT FOR IF EVERYTHING ELSE IN THE FINANCIAL SYSTEM IS FUNCTIONING NORMALLY. REMEMBER, MARKETS DON’T JUST MOVE IN ONE DIRECTION IN FACT, DAYS LIKE THIS, THESE ARE GOOD EVIDENCE THAT MARKETS ARE PROPERLY FUNCTIONING AND THAT THEY’RE ACTUALLY TRYING TO FIGURE OUT WHAT PRICE DIFFERENT SECURITIES SHOULD TRADE AT. SO SOMETHING LIKE THIS. THIS IS A FEATURE OF MARKETS. IT’S NOT A BUG WHEN YOU NECESSARILY SEE MARKETS SLIDING A LITTLE BIT BECAUSE OF BAD NEWS. WELL SO CHUCK TO THAT END WE SAW THE REPORTS COME OUT LATE LAST WEEK. THE JOBS NUMBERS ARE MUCH WEAKER THAN EXPECTED UNEMPLOYMENT NOW AT MULTI YEAR HIGHS. AND YOU KNOW THERE’S SOME QUESTION ABOUT HOW HOW THE STOCK MARKET IS HOW HOW THE US MARKET OVERALL IS SLOWING OR NOT. SO WHAT WE’RE SEEING ON FRIDAY, WHAT WE’RE SEEING TODAY WITH THE DOW. IS THIS A REACTION TO THAT NEWS OR AN OVERREACTION TO THAT NEWS? I THINK IT’S AN APPROPRIATE REACTION. I MEAN, THE S&P 500, WHICH I THINK IS, YOU KNOW, KIND OF RECOGNIZED AS THE BROADEST BENCHMARK FOR THE U.S. STOCK MARKET. IT STILL IS NOT EVEN OFF 10% FROM ITS ALL TIME HIGH. SO I DO THINK IT’S SOMETHING WHERE THE MARKET, YOU KNOW, IS TAKING THIS NEWS AND DIGESTING IT APPROPRIATELY. IT’S NOT SOMETHING WHERE YOU’VE SEEN MARKETS FALL 20, 30, 40%. AND THOSE ARE THE KINDS OF THINGS THAT TYPICALLY HAPPEN, YOU KNOW, IF YOU ACTUALLY WERE TO SEE A MEANINGFUL RECESSION AND A BEAR MARKET, THOSE ARE THE KINDS OF THINGS THAT YOU WOULD SEE IF THAT WERE TO DEVELOP. SO THE FACT THAT STOCKS, YOU KNOW, DEPENDING ON THE INDEX YOU LOOK AT HAVE FALLEN ANYWHERE BETWEEN 6 AND 15%, RIGHT NOW. I THINK THAT’S A NORMAL REACTION. IT’S NOT NECESSARILY YOU KNOW, COMFORTING TO TO HEAR THAT YOU STILL SAY, GEE, I DON’T LIKE THIS, BUT IT IS SOMETHING THAT YOU WOULD EXPECT TO SEE GIVEN THE RUN OF WEAKER NEWS THAT WE’VE SEEN IN THE LAST COUPLE OF WEEKS. CHUCK, I’M HEARING WORDS LIKE NORMAL THAT YOU’RE USING, AND CERTAINLY FOR SOMEBODY WHO IS JUST ON THE COUCH AND INVESTING OR WORRIED ABOUT THEIR 401 K, THAT’S GOOD NEWS FOR THEM. AND OTHERWISE, WHEN WE DO ENTER THIS ROLLER COASTER CYCLICAL MARKET RIDE THAT WE TEND TO SOMETIMES WE DO HEAR ADVICE FROM ADVISORS, SIT TIGHT. DO NOT PANIC. SO YOU SEEM MORE LIKE THAT WITH THINGS AND HOW THEY LOOK TODAY. I THINK PART OF IT LOOK, I EXPERIENCE THIS EVERY DAY. AND SO I’M VERY MUCH USED TO THIS. THIS IS THE ENVIRONMENT THAT I LIVE IN. AND I REALIZE THAT NOT EVERYONE WHO IS WATCHING IS, YOU KNOW, IN THE SAME BOAT THEY MIGHT NOT PAY ATTENTION TO THIS AS CLOSELY AS I DO. SO I DO WANT TO SAY, LOOK, IT’S COMPLETELY NORMAL TO BE NERVOUS ABOUT DAYS LIKE THIS AND IT LOOK EVEN FOLKS LIKE MYSELF, WE HAVE THOSE EMOTIONS TOO, AS WE TRY TO DIGEST WHAT’S GOING ON. THE IMPORTANT THING IS NOT TO MAKE OVERLY EMOTIONAL DECISIONS, NOT JUST IN INVESTING. I THINK THAT’S A GOOD, YOU KNOW, RULE OF THUMB FOR LIFE, BUT YOU CAN REALLY HURT YOURSELF FINANCIALLY IF YOU’RE MAKING EMOTIONAL INVESTING DECISIONS BECAUSE OF A BAD DAY OR WEEK IN THE MARKET. THERE’S THERE’S A GREAT STAT FROM CORLEY COX, WHO WORKS AT RITHOLTZ WEALTH, AND SHE SHOWED THAT IN THE S&P 500 HISTORY, 94% OF YEARS SINCE IT’S BEEN AROUND, THERE’S AT LEAST A 5% DROP THAT HAPPENED SOMEWHERE OVER THE COURSE OF THAT YEAR. SO THIS IS COMPLETELY NORMAL. WHAT WE’RE SEEING, EVEN A 10% DROP HAPPENS IN 64% OF YEARS. AT SOME POINT. SO I KNOW IT CAN BE SCARY. I KNOW IT CAN BE A LITTLE BIT NERVE WRACKING, BUT THIS IS ACTUALLY NORMAL FOR HOW MARKETS TEND TO MOVE. IT’S JUST NOT REALLY THE MOST FUN GOING THROUGH IT. AND I TOTALLY UNDERSTAND THAT. CHUCK ARMSTRONG ADVISORY GROUP, WE COVERED A LOT O
Stock market today: Wall Street steadies after its worst day in nearly 2 years, and stocks are mixed
Updated: 9:13 AM CDT Aug 6, 2024
Some calm is returning to Wall Street, and U.S. stocks are holding steadier after Japan’s market soared earlier Tuesday to bounce back from its worst loss since 1987.The S&P 500 was 0.2% higher in early trading and on track to break a brutal three-day losing streak. It had tumbled a bit more than 6% after several weaker-than-expected reports raised worries the Federal Reserve had pressed the brakes too hard for too long on the U.S. economy through high interest rates in order to beat inflation.The Dow Jones Industrial Average was up 47 points, or 0.1%, as of 9:43 a.m. Eastern time, and the Nasdaq composite was 0.3% lower.Stronger-than-expected profit reports from several big U.S. companies helped support the market. Kenvue, the company behind Tylenol and Band-Aids, jumped 13.5% after reporting stronger profit than expected thanks in part to higher prices for its products. Uber rolled 4.3% higher after easily topping profit forecasts for the latest quarter.Caterpillar veered from an early loss to a gain of 1.7% after reporting stronger earnings than expected but weaker revenue.Several technical factors may have accelerated the recent swoon for markets, beyond the weak U.S. hiring data and other reports, in what strategists at Barclays call “a perfect storm” for causing extreme market moves. One is centered in Tokyo, where a favorite trade for hedge funds and other investors began unraveling last week after the Bank of Japan made borrowing more expensive by raising interest rates above virtually zero.Video below: Nebraska economist discusses what stock market downfall meansThat scrambled trades where investors had borrowed Japanese yen at low cost and invested it elsewhere around the world. The resulting exits from those trades may have helped accelerate the declines for markets around the world.But Japan’s Nikkei 225 jumped 10.2% Tuesday, following its 12.4% sell-off the day before, which was its worst since the Black Monday crash of 1987. Stocks in Tokyo rebounded as the value of the Japanese yen stabilized a bit against the U.S. dollar following several days of sharp gains.“The speed, the magnitude and the shock factor clearly demonstrate” how much of the moves were driven by how traders were positioned, rather than just worries about the economy, according to the strategists at Barclays led by Stefano Pascale and Anshul Gupta.Still, some voices along Wall Street are continuing to urge caution.Barry Bannister, chief equity strategist at Stifel, is warning more drops could be ahead because of a slowing U.S. economy and sticky inflation. He had been predicting a coming “correction” in U.S. stock prices for a while, including an acknowledgement in July that his initial call was early. That was two days before the S&P 500 set its latest all-time high and then began sinking.While fears are rising about a slowing U.S. economy, it is still growing, and a recession is far from a certainty. The U.S. stock market is also still up a healthy amount for the year so far. The S&P 500 has romped to dozens of all-time highs this year, in part due to a frenzy around artificial-intelligence technology and critics have been saying prices looked too expensive.Elsewhere, European markets were mostly left out of the rebound, with stock indexes down modestly in Germany France and the United Kingdom.
Some calm is returning to Wall Street, and U.S. stocks are holding steadier after Japan’s market soared earlier Tuesday to bounce back from its worst loss since 1987.
The S&P 500 was 0.2% higher in early trading and on track to break a brutal three-day losing streak. It had tumbled a bit more than 6% after several weaker-than-expected reports raised worries the Federal Reserve had pressed the brakes too hard for too long on the U.S. economy through high interest rates in order to beat inflation.
The Dow Jones Industrial Average was up 47 points, or 0.1%, as of 9:43 a.m. Eastern time, and the Nasdaq composite was 0.3% lower.
Stronger-than-expected profit reports from several big U.S. companies helped support the market. Kenvue, the company behind Tylenol and Band-Aids, jumped 13.5% after reporting stronger profit than expected thanks in part to higher prices for its products. Uber rolled 4.3% higher after easily topping profit forecasts for the latest quarter.
Caterpillar veered from an early loss to a gain of 1.7% after reporting stronger earnings than expected but weaker revenue.
Several technical factors may have accelerated the recent swoon for markets, beyond the weak U.S. hiring data and other reports, in what strategists at Barclays call “a perfect storm” for causing extreme market moves. One is centered in Tokyo, where a favorite trade for hedge funds and other investors began unraveling last week after the Bank of Japan made borrowing more expensive by raising interest rates above virtually zero.
Video below: Nebraska economist discusses what stock market downfall means
That scrambled trades where investors had borrowed Japanese yen at low cost and invested it elsewhere around the world. The resulting exits from those trades may have helped accelerate the declines for markets around the world.
But Japan’s Nikkei 225 jumped 10.2% Tuesday, following its 12.4% sell-off the day before, which was its worst since the Black Monday crash of 1987. Stocks in Tokyo rebounded as the value of the Japanese yen stabilized a bit against the U.S. dollar following several days of sharp gains.
“The speed, the magnitude and the shock factor clearly demonstrate” how much of the moves were driven by how traders were positioned, rather than just worries about the economy, according to the strategists at Barclays led by Stefano Pascale and Anshul Gupta.
Still, some voices along Wall Street are continuing to urge caution.
Barry Bannister, chief equity strategist at Stifel, is warning more drops could be ahead because of a slowing U.S. economy and sticky inflation. He had been predicting a coming “correction” in U.S. stock prices for a while, including an acknowledgement in July that his initial call was early. That was two days before the S&P 500 set its latest all-time high and then began sinking.
While fears are rising about a slowing U.S. economy, it is still growing, and a recession is far from a certainty. The U.S. stock market is also still up a healthy amount for the year so far. The S&P 500 has romped to dozens of all-time highs this year, in part due to a frenzy around artificial-intelligence technology and critics have been saying prices looked too expensive.
Elsewhere, European markets were mostly left out of the rebound, with stock indexes down modestly in Germany France and the United Kingdom.
