Friends
It was a miserable week for stocks. The poster child for this week’s market action was Netflix. The streaming service company’s shares plunged today after a less than stellar earnings report after yesterday’s close. We are certainly in a different environment for stocks than we saw last year. All news is being sold and instead of dips being bought, any attempt to rally is being met with heavy selling pressure. With that said, even moments like this (bear market?) have strong rallies within them. But early rallies and late fades are not a good recipe for the bulls.
As for today, by the close the Dow Jones Industrial Average was down 450 points to finish the day at 34,265. The S&P 500 was down 84 points to close at 4,397. The Nasdaq Composite Index was down 385 points to close at 13,768. Gold was down $12 to trade at $1,830 per ounce, while oil was down $.87 to trade at $84.68 per barrel WTI.
Now, next week we have a lot on our plate. There is an FOMC meeting which will wrap up on Wednesday, so we’ll get to hear what is on the mind of Fed Chair Powell. In addition, we will get earnings releases from a plethora of companies including 3M, Lockheed Martin, GE, AT&T, Microsoft, J & J, Kimberly-Clark, Southwest Airlines, Apple, McDonalds, Dow, Chevron, and Caterpillar just to mention a few. The headwinds to which we refer almost daily are providing a formidable obstruction for the bulls at the moment. The beleaguered Nasdaq is now down almost 15% from last year’s high. These are the times that test the investor’s resolve. But given the gains that were fueled by easy money over the past several years it’s quite logical that we have a reset after the conditions that caused markets to do what they did have changed. Double digit returns on stocks in a zero-interest rate environment come at a cost. Again, the price you pay to get on the ride that will propel you to financial success is volatility. Someone referenced October 1987 today with regards to how stocks are acting in the last hour of trading each day so far in January. I was there in the middle of it all in back then. Sure, it left a few scars, but we got through it. The S&P 500 was around 225 back then and is almost 4,400 today. Always good to keep things in perspective.
Have a great weekend everyone.
