David's Feed
Jan 14, 2015

Breaking down Tuesday’s S&P breakdown

Jan 13 (Reuters) – U.S. stocks looked set to snap a two-day
losing streak on Tuesday as trading moved into early afternoon.

Then, in the space of an hour, all the day’s gains vanished
in a spate of high-volume selling, leaving investors once again
with concerns about oil, global growth, and all of the market’s
other persistent fears of late.

Jan 13, 2015
via Morning Bid with David Gaffen

The madness of crowded trades

As we enter earnings season, there are some headwinds for various corners of the S&P 500, which itself still hovers just a few percentage points from an all-time high.

The energy sector is, of course, going through a drastic re-pricing, as markets for underlying commodities continue to fall. Other sectors may not see the ancillary benefit from declining energy costs as quickly, so the net negative is going to outweigh the positive, at least for the fourth-quarter reports.

Jan 7, 2015
via Morning Bid with David Gaffen

Retail therapy amid oil’s decline

The market’s in a bit of a swoon now, so it is difficult to suss out where some of the bright spots will be when it comes to the effect that oil’s decline has on markets and on the economy. The pullback has been severe, with analysts furiously downgrading the shares of energy stocks – among other sectors – and overall revisions sliding, given the heavy focus many companies have internationally, accounting for about 45 percent of the revenues of the S&P 500.

The small-cap sector is a bit less affected by the international pull, with non-U.S. sales accounting for around 15 percent of overall sales in the S&P 600, according to Howard Silverblatt of S&P.

Jan 6, 2015
via Morning Bid with David Gaffen

The Fed disconnect

There’s something of a disconnect right now when it comes to the expectations the Fed will raise rates before long – the markets still see it as happening in late-2015, the most recent poll of primary dealers puts it in the mid-2015 area – and the way in which inflation expectations overall have dropped in the last few weeks, given the plunge in oil prices.

We’ll be seeing some data later on Tuesday on service-sector sentiment, out of both Markit and ISM, that should give a sense of what the sector is seeing in terms of demand growth and prices being paid. And so while energy is a part of that, there is a definite sense the economy pulled back a bit in the fourth quarter after two very strong quarters of growth.

Jan 5, 2015
via Morning Bid with David Gaffen

Begin again

U.S. markets stumbled a little out of the gate in 2015, after a third year of double-digit gains. The market is having a weak go of it Monday morning, and funds are moving over into the bond market to continue the now-into-three-years run of “are you kidding me with these yields” that’s likely to confound more than a few people this year.

The expectation is that the markets will find a way to muddle through various issues that have investors worried over the idea that this is going to be a flat, go-nowhere kind of year, with a few rallies and a few corrections, so a lot of running to go nowhere.

Dec 31, 2014

Analysis – After 2014′s party, investors in U.S. stock market may face a hangover

By David Gaffen and Rodrigo Campos

(Reuters) – Revelers ringing in of the new year this week need to watch out for the next day’s hangover. And investors may experience a similar feeling early in 2015 after a two-year run that has propelled U.S. stocks up by nearly 50 percent.

Headed into the last trading day of 2014, the S&P 500 has gained nearly 13 percent on the year, shaking off concerns about valuations thanks to improved economic growth and a very accommodative U.S. Federal Reserve. Add in dividends and the advance is 15 percent.

Dec 31, 2014

After 2014′s party, investors in U.S. stock market may face a hangover

By David Gaffen and Rodrigo Campos

(Reuters) – Revelers ringing in of the new year this week need to watch out for the next day’s hangover. And investors may experience a similar feeling early in 2015 after a two-year run that has propelled U.S. stocks up by nearly 50 percent.

Headed into the last trading day of 2014, the S&P 500 has gained nearly 13 percent on the year, shaking off concerns about valuations thanks to improved economic growth and a very accommodative U.S. Federal Reserve. Add in dividends and the advance is 15 percent.

Dec 20, 2014

Equities extend rally; oil rebounds, helping rouble rise

NEW YORK (Reuters) – Equity markets worldwide extended the week’s rally on Friday and oil prices rebounded from recent lows, as investors closed out the last full week of trading in 2014 on an upbeat note.

Wall Street rose, and the S&P 500 came within a few points of its closing record high. The index has gained 5 percent since Wednesday for its best three-day stretch since 2011.

Dec 19, 2014

Equities extend rally, oil rebounds

LONDON/NEW YORK (Reuters) – Equity markets worldwide extended the week’s rally on Friday, and oil prices rebounded from recent lows as traders said investors were starting to reduce exposure as the end of year approaches.

Wall Street posted modest gains after the S&P 500′s best two-day rally in three years brought the index within 1 percent of an all-time high, built on favorable comments from the U.S. Federal Reserve.

Dec 19, 2014
via Morning Bid with David Gaffen

That escalated quickly

It’s hard to determine whether the two-day run in the S&P 500 is a sign of an emerging “blow-off” top of the market, where a frenzied rally gives way to several months of weakness (lately, weakness has been measured in hours and minutes, rather than weeks or months), or if it’s the sign of investors growing more comfortable with the notion that the Fed’s exit from its zero-interest-rate policy that has lasted for several years isn’t such a bad thing, and that the economy can handle it.

Certainly, markets have seen two-day rallies of this magnitude before, and they’ve also seen two-day reactions to the Fed before. The last few minutes – where the S&P added 7 points in a flourish – may have been algorithm-related, or more likely the result of dealers having to buy shares in order to get right with their options exposure. (They’re trying to remain what’s known as “delta neutral,” and the sudden moves in the market exposes them in a way that they’d prefer not to be – buying stocks helps them offset that, especially when Friday is “quadruple witching” day, the day when options on single stocks and futures expire. This type of action would not likely be seen when quad witch isn’t an issue).

    • About David

      "David Gaffen oversees the U.S. markets team, having joined Reuters in May 2009. He spent four years at the Wall Street Journal, where he was the original writer of the web site's MarketBeat blog. He is a frequent guest on Reuters TV, and has appeared on CNN International, Fox Business, NPR, and assorted other media and is the author of the book "Never Buy Another Stock Again.""
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