Trump’s Trip Ups Trigger Chaos!
A market sell-off was supposed to come sooner or later. And boy, did it come, yesterday! Stocks shouldered their worst trading day in months, Wall Street battered by its worst sell-off since September 2016 on the background of a series of developments all embroiling President Trump: the sacking of FBI Chief, James Comey, last week, and the illicit dealings between Michael Flynn, Trump’s former national security advisor, and Russia. And if you want to go into further detail, just yesterday a document was leaked that Trump had asked Comey, to end his investigation into alleged collusion between Flynn and Russia – “I hope you can let this go,” Trump having told his former FBI chief. All of these increased the chances of a congressional investigation and even impeachment proceedings; online betting sites, a case in point, place odds of 25% on that materializing.
For Wall Street, the concern is palpable. Investors are concerned that the political shocks will threaten Trump’s ability to spearhead the business friendly legislative agenda he pushed during the election campaign. That very agenda, you can recall, led to a massive stock market rally after the elections. It seems that, judging by the market’s take on things, the latest tempest won’t be just another road bump on Trump’s presidential ride. It seems that the market is communicating that the latest curveball shouldn’t be taken lightly.
In Summary for the Day: The Dow Jones and the S&P 500 each shed 1.8%, the NASDAQ tumbling 2.6%. The Russell 2000 also took a beating, diving 2.8%. Gold soared 1.8%, investors fleeing to safe haven assets. Crude rose 0.8%.
Apple (AAPL) fell 3.4%, recording its worst performing day since April 2016.
Financial stocks led the way lower. The Exchange Traded Fund on the sector, the XLF, toppled 3.15%. The banking sector (KBE) tumbled 4%, Bank of America (BAC) leading the way with sharp declines of 5.9%, J.P. Morgan (JPM) shedding 3.8%.
Investors sought refuge in defensive stocks, paving the way for REITs (real estate funds) and Utilities (XLU), which rose 0.7% and 0.3% respectively. The stock of Colgate-Palmolive (CL) soared 5.7% after the N.Y. Post announced that the company CEO had told investors that he’s open to selling the company at a 40% premium to the current market price. Target (TGT) gained 1.4% after releasing solid numbers, increasingly rare for the retail sector. The company reported before opening a large Q1 earnings surprise, with only a slight decline in chain sales.
For the first time in months, Wall Street is trading under pressure. The Dow Jones fell beneath the 50 period EMA, the VIX index soaring 46%, past its 200 period EMA, to the 15.59 point level. Wherever you look on the charts, the technical damage is evident.
Yesterday’s declines came at the heart of the month of May, known for its negative stock movement, and Wall Street’s time-honored saying, “Sell in May and Go Away.” Furthermore, these latest losses surfaced with the P/E ratio on Wall Street at highs only matched by that of the stock market bubble in 1929 and 2000 – and with investors having ignored macro-economic figures over the last 2 months that point to a slowdown in the American economy.
On the S&P 500, 11 stocks rose to new 52-week highs, 19 dipping to new yearly lows; on the NASDAQ, 28 stocks recorded new 52-week highs, 93 falling to new yearly lows.
About 8.37 billion shares changed hands on U.S. exchanges, compared to the 6.9 billion average over the last 20 trading days.
Thursday: Many market strategists expect the negative headwinds to be around for the upcoming period. The main concern is from the bond market, where – for weeks now – all of the optimism about Trump’s high-flying economic agenda has fizzled out and is nowhere to be seen in current pricing. All of this makes the next round of economic figures very important. At the same time, this week is relatively slim on key figures.
On Thursday, the Philadelphia Fed survey will be released at 8:30 N.Y. time, along with weekly unemployment claims.
Earnings reports are expected from Walmart (WMT), which unofficially caps off the Q1 earnings season. Additional results are expected before opening from Alibaba (BABA), and Ralph Lauren (RL). After closing, be primed for the numbers of AMAT, CRM, GPS, ROST, and ADSK.
Thursday’s Hot Stocks: WMT, BABA, RL, LB, CSCO, PLCE
IPOs: ARGX, BEDU
Have a great trading day!
|Wednesday||10:30||Crude Oil Inventories||–||Low|
|VIPS||Vipshop Holdings Limited||PM||Monday|
|LBTYA||Liberty Global plc||PM||Monday|
|DKS||Dick’s Sporting Goods, Inc.||AM||Tuesday|
|TJX||The TJX Companies, Inc.||AM||Tuesday|
|HD||The Home Depot, Inc.||AM||Tuesday|
|JACK||Jack in the Box Inc.||PM||Tuesday|
|URBN||Urban Outfitters, Inc.||PM||Tuesday|
|AEO||American Eagle Outfitters, Inc.||AM||Wednesday|
|LB||L Brands, Inc.||PM||Wednesday|
|FLO||Flowers Foods, Inc.||PM||Wednesday|
|CSCO||Cisco Systems, Inc.||PM||Wednesday|
|WMT||Wal-Mart Stores, Inc.||AM||Thursday|
|BABA||Alibaba Group Holding Limited||AM||Thursday|
|RL||Ralph Lauren Corporation||AM||Thursday|
|PLCE||The Children’s Place, Inc.||AM||Thursday|
|GPS||The Gap, Inc.||AM||Thursday|
|ROST||Ross Stores, Inc.||PM||Thursday|
|AMAT||Applied Materials, Inc.||PM||Thursday|
|DE||Deere & Company||AM||Friday|
|CPB||Campbell Soup Company||AM||Friday|
|FL||Foot Locker, Inc.||AM||Friday|
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