- Stocks turn negative for month as oil falters. Major indexes slipped more than 1% on Tuesday after hopes of a production freeze between OPEC and non-OPEC states all but fell apart, driving WTI crude oil prices down nearly 5%; a downbeat reading on consumer confidence also sapped appetite for risk assets. JP Morgan’s disclosure of a more than 60% increase in loan loss reserves tied to energy dragged on financials, while technology stocks also fell sharply following negative news on the mergers and acquisitions front and weakness in sector leader Apple. Cash flowed into Treasuries as traders exited equities, pushing the yield on 10-year Treasury Notes down 0.07% to 1.74%; COMEX gold rose 1% and the dollar also moved higher. Final tallies: Dow -189.08 at 16431.44, Nasdaq -67.02 at 4503.52, S&P 500 -24.24 (-1.25%) at 1921.19.
- Markets lower amid ongoing lockstep with oil. Equities are continuing Tuesday’s declines as oil moves back toward the $30 mark, unable to sever ongoing ties as persistently low prices raise concerns about falling global growth. Consequently, government bonds are in demand; Treasury yields are falling, as are safe-haven currencies such as the dollar and yen, which weighed on the Nikkei Index overnight. Commodity-linked stocks are leading to the downside in European trading as indexes bounce around their worst levels of the session. Gold, meanwhile, continues its ascent as traders seek shelter amid the sell-off.
- The S&P 500 and crude oil continue to trade together. One day after both saw nice gains, stocks and crude oil reversed lower yesterday. This is nothing new, as most days this year the S&P 500 has followed the path of crude oil. Turning to history, going back to 1983, we found that 51% of all days saw both crude oil and the S&P 500 trade in the same direction on any given day (both higher or both lower). What is amazing about this year is that ratio has moved up–74.3% of all days the two assets have moved together. This is the highest correlation (data dating back to 1983), above the previous record of 72.4% in 2012.
- Housing Starts and Building Permits (Jan)
- FOMC Minutes
- UK: Jobless Claims and Unemployment Rate (Jan)
- China: CPI (Jan)
- CPI (Jan)
- EU Leaders Summit
- Japan: Nikkei Japan Mfg. PMI (Feb)
Past performance is no guarantee of future results.
The economic forecasts set forth in the presentation may not develop as predicted.
The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
Stock investing involves risk including loss of principal.
Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.
Treasury inflation-protected securities (TIPS) help eliminate inflation risk to your portfolio, as the principal is adjusted semiannually for inflation based on the Consumer Price Index (CPI)—while providing a real rate of return guaranteed by the U.S. government. However, a few things you need to be aware of is that the CPI might not accurately match the general inflation rate; so the principal balance on TIPS may not keep pace with the actual rate of inflation. The real interest yields on TIPS may rise, especially if there is a sharp spike in interest rates. If so, the rate of return on TIPS could lag behind other types of inflation-protected securities, like floating rate notes and T-bills. TIPs do not pay the inflation-adjusted balance until maturity, and the accrued principal on TIPS could decline, if there is deflation.
Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk.
Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments.
Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards.
High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors.
Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply.
Investing in real estate/REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained.
Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.
Technical Analysis is a methodology for evaluating securities based on statistics generated by market activity, such as past prices, volume and momentum, and is not intended to be used as the sole mechanism for trading decisions. Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns and trends. Technical analysis carries inherent risk, chief amongst which is that past performance is not indicative of future results. Technical Analysis should be used in conjunction with Fundamental Analysis within the decision making process and shall include but not be limited to the following considerations: investment thesis, suitability, expected time horizon, and operational factors, such as trading costs are examples.
Selling short can result in losses should the borrowed security increase in price, rather than decline. The theoretical potential loss is unlimited. Additionally, short sales will incur interest on the borrowed shares while also being subject to margin calls, or early sales in the event that the original owner wishes to sell their position.
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