Week-In-Review: Market Starting To Pullback
The market finally paused last week to digest the recent and very strong move it has enjoyed over the past year. Remember, it is perfectly normal (and healthy) to see the market pullback after a big move. The key now is to analyze this pullback to see if it is another short-term healthy pullback or something more extreme. For now, it appears to be former, not the latter but anything can happen on Wall Street.
The US markets were closed on Monday for the MLK holiday but the IMF said the global economy remains sluggish which is not a great sign. The market fell on Tuesday after Boeing said it doesn’t expect regulators to sign off on its troubled 737 Max until June or July. Thank n the afternoon, stocks fell after news of the first coronavirus case in the U.S. hit the wires which spooked investors. Stocks rallied on Wednesday but closed in the lower half of their daily range which may signal near term fatigue. Netflix slid after reporting earnings and Tesla’s market cap topped $100 billion for the first time ever.
Thursday & Friday Action:
Stocks were quiet on Thursday as the market paused to digest a very strong move. The latest round of earnings were released and the World Health Organization try to calm fears about the China’s born coronavirus. Comcast and Travelers were some of the well-known stocks that reported earnings. Both companies reported better-than-expected quarterly numbers but Comcast slid 3% and Travelers fell by 5%. Stocks fell on Friday after the second confirmed case of the coronavirus occurred in the U.S.
Market Outlook: Easy Money Is Back
Once again, global central banks are back on the easy money bandwagon after the Fed and the ECB both announced more easy money measures directly aimed at stimulating global markets. The market has soared all year based on two key points: optimism that a trade deal will be reached between the U.S. and China and more easy money from global central banks. In 2019, the Federal Reserve reversed its stance and moved back into the easy money camp. Then, other central banks followed suit and that means easy money is back to being front and center for the market. Separately, the trade talks are moving in the right direction which is another positive. As always, keep your losses small and never argue with the tape.