Last week’s meteoric rise and blast through DOW 20,000 has been somewhat short-lived. Following the peak close of 20,125, the major index has fallen 250 points and closed down 107 points today at 19,864. The S&P 500 and NASDAQ after achieving their own record highs last week have dropped, too. The S&P 500 lost 2 points today to close at 2,278 and the NASDAQ added a point to end at 5,614. All three major indices were positive for the month of January.
Investors seem to be turned off lately to the political actions of the new administration. A good example is the latest ban on immigration from seven Muslim-majority countries. Included in the executive order are legal residents and visa holders who have been temporarily halted on entry to this country of refugees. This ban has sparked worldwide protests at airports around the globe and led to statements of disagreement from most of the large technology companies who are concerned about the potential overhaul of the Hi-B visa program used by these companies to hire high-skilled workers. Other corporate heads reacted to this order negatively, too.
Today, the Dow was hurt by declines in the shares of GS, 3M, DD, IBM CAT, BA and the energy components. Airline stocks suffered for obvious reasons. In addition, materials producers underwent large selloffs as well. In fact, the damage was so widespread that only 3 of the 30 DOW stocks ended with gains.
Bond yields here eased a bit with the 10-year Treasury Note at 2.47% despite the fact that European bond yields have been moving higher due to German price inflation. The dollar continued its weakening trend and as a result gold prices moved back up to $1,211 an ounce while crude oil ended lower at $52.71 a barrel, literally going nowhere recently.
Earnings continue pouring in with 174 S&P 500companies having already reported. The profit number is thus far higher by 6.8% as 74% of these companies have beaten on the earnings side while 53% have come in better than revenue estimates.
The earnings parade continues this week with the following companies reporting – tonight – DOW component AAPL plus AMD and EA; Wednesday – ALL, MET, MO and FB; Thursday – DOW components MRK and V, plus AMZN, AMGN and EL.
Donald M. Selkin
These are excerpts from Don Selkin’s Daily Market Notes, abbreviated and updated with permission from the author. Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide our customers with timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analyses concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, Recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: {Bloomberg Financial, Reuters, Associated Press}