July 25, 1999
Last week, the Dow Jones Industrial Average was down 298.88 points to 10,910.96 (-2.67%), the Nasdaq Composite was down 172.08 points to 2692.40 (-6.01%), the S&P 500 was down 61.84 to 1356.94 (-4.36%) and the Russell 2000 index of small cap stocks was down 16.88 to 448.38 (-3.63%).
For the year, the Dow is up +18.84%, the Nasdaq up +22.79%, the S&P up +10.39% and the Russell 2000 up 6.26%. The StockMotions Newsletter Tracking Portfolio is up 34.42% for the year. (It was actually up 1.17% last week…partially due to its short exposure in the Internet sector). To automatically receive portfolio updates before they happen, you may sign up at:
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From last week's newsletter:
“Of course, the recent rise has been quite strong, especially in the Nasdaq.
It wouldn't be surprising to see a bit of a pull back here….possible giving
another chance for an entrance to some top performing companies”
Well, we certainly got a pullback. Without a doubt, the great earnings just reported were well priced into many companies. Add to that, a high tech CFO calling his own company's stock at scary levels (that was Microsoft's CFO this past week) and IBM hinting a bit at a slight slowdown in earnings growth and you have the ingredients for some profit taking. Oh yeah, then there was Mr. Greenspan warning the markets that the Fed is ready to act forcefully to nip inflation when or if it ever shows up again….(but isn't that what supposedly cranked the markets up during one of his last speeches???).
Another concern for the market is the uptick in yields again. For the most part, it happened right around the time that Alan Greenspan uttered the “fight against inflation” warning. The bond market interpreted this as a sign that the Fed may not be finished with their interest rate hikes. This market cannot sustain its current levels with another period of rising rates (as happened from October to June).
As ironic as it sounds, lawmakers will more than likely determine the Fed's next action….the catalyst will be the outcome of the “tax cut” debate. The following “lesson” hints at why this irony exists.
see next post:
Paulo
stockmotions.com
Copyright: 1999 StockMotions.com |
