An anxiety disorder caught the streets earlier in the week and started a difficult start in a week. As weekends approach, people’s attention may start to shift to major football games, but for now, the market’s focus seems to be locked in a market indicator: the yield on 10-year Treasury bonds surpassed 2.7% for the first time since 2014.
As investors know, higher yields reflect inflation concerns and may increase borrowing costs for businesses and consumers, which may slow the economy. They may also trigger fears that the Fed may be tougher. For a long time cheaper money, investors realized that one day the money might get more expensive.
The Dow Jones Industrial Average, which is likely to fall 200 points in early trading Tuesday morning, will ease most of the gains late last week but still could not get off its all-time high. None of this has changed the fact that this year marks a startling start, and the sell-off in days is not necessarily unprecedented.
In addition to yield, another figure indicating potential market concerns is VIX, the so-called “panic index,” which rose to 14.3 in early trading on Monday and more than 20% on Monday. In the meantime, foreign markets joined the sell-off, while oil was hit and gold prices remained at their recent highs.
Sometimes, like this, it is important not to panic or try to dominate the market. Keep things up and keep in mind that while people are worried about the issue of interest rates, even at 2.7% yields are still at historic lows, signs of inflation have not changed. Right now, there seems to be a concern that possible inflation is more likely to impact bond markets than real inflation, creating problems for industries that are more sensitive to interest rates, such as real estate and utilities. Telecommunications and real estate sectors fell more than 1% on Monday.
Nevertheless, the performance on Monday or Tuesday was not very good in early trading. Yesterday, each sector fell. Energy prices fell 1.55%, making it the worst performing part of the oil market. The hat also put it on the chin. Even financial stocks with rising yields fell by nearly 0.5% on Monday. After the gains reached historic highs last week, profit taking may play a role. Today, the possibility of similar actions is not ruled out.
Concerns about Apple is another weight earlier in the day. Analysts have been very worried about the iPhone demand. Apple reported on Thursday that its conference call might be in attendance. Any indication that the needs of the iPhone, if verified by the company, could be harmed, but it is important to focus on what executives think of future product demonstrations and how they perceive the formation of demand. Meanwhile, Asian shares hit the market on Tuesday as share prices of Apple supplier companies fell. We continue to see more warning signals ahead of earnings, especially with the iPhone X. A problem may be the price of 1,000 US dollars.
Apple and other more than 120 S & P 500 reports led to public concern, the report can be said to be the busiest week of the week. As Lockheed Martin and Seagate are above analysts’ expectations, things started to get stronger on Monday. For the LMT, the missile and fire control business helped to illuminate the fourth quarter revenue growth, or more than 30%.
Pfizer and McDonald’s are larger companies this morning, and Tomorrow is the busiest earnings day for Boeing in the quarterly morning, followed by AT & T, Microsoft and Facebook.
McDonald’s earnings per share easily beat Wall Street analysts’ expectations, but the stock fell in pre-market trading, probably because all its SSSG sales were not as good as some investors expected. Pfizer’s performance looks very strong, the expectations for other pharmaceutical industry is still high.
The Federal Reserve meeting begins today, under the guidance of Yellen’s last president. According to the futures market, it seems unlikely that others this week will send Yellen to the sunset by way of a rate hike as the odds for this week’s session remain below 5%. Nevertheless, Wednesday’s statement may be the last statement of Yellen after Powell took over Yellen ahead of the March meeting. The possibility of a rate hike was about 75%, up slightly from last week.
When President Trump submits his State of the Union address to Congress, the focus may shift from tonight’s earnings and the Federal Reserve. Investors may want to consider the tone of the president. Trump’s speech at Davos last week seems to have helped the market, especially because of some market-friendly trading languages. Please keep watching to see if the president has any comments on infrastructure. After Trump’s campaign promises, many investors have been waiting to hear more news, materials and industries have tended to benefit from major infrastructure projects.
Sneaking into diving: Last week we looked at the S & P 500 ahead of Wall Street so far this year but also helped to delve deeper into what sub-sectors are leading and why. The main sub-sectors as of last weekend came from all over the economy, which may be a sign that the economy is undergoing a multi-cylinder launch. CFRA Research said Internet and direct-selling retail stocks rose more than 21%, followed by department stores, biotechnology, healthcare distributors and forest products. In this list to see the department store is a small turning point. In the past two years, so much ink has been circulating that the department store is dead, but it seems investors may not agree.
As we pointed out last week, the biotech sector is hoping for some more mergers and acquisitions in the industry because of tax bills. Some analysts say health care retailers are leading the healthcare market so far this year and may fail by Congress overturning health care reform last year. Forest products? So when people have money in their pockets, what they sometimes go out and buy is new furniture.
Get Healthy: Everyone is talking about this week’s IT revenue, which is not surprising given that Apple, Alphabet, Amazon, Facebook and Microsoft are all rising in revenue over the next few days. Another area of ??concern is health care, with some of the important report titles including Pfizer today, Eli Lilly tomorrow and Merck Friday. AbbVie posted a strong quarterly profit report last Friday, with some analysts suggesting it could be the forerunner of some of the other big pharmaceutical companies. Investors may be looking for any effect of the 2017 Eli Lilly coming to patent the treatment of ADHD, thrombotic drugs Effient and Axiron (testosterone) when Lilly reports before it is released tomorrow.
Despite the rise in the inflation rate, the yield did not show up: the yield on the 10-year note rose to 2.71% on Monday, its highest level in almost four years, despite another downturn in government inflation reports. The Consumer Price Index (PCE) rose only 0.1% in December, below the 0.2% forecast by Wall Street analysts. Core PCE prices rose 0.2%, in line with market expectations. PCE prices rose just 1.7% year-on-year, down from 1.8% in November and still below the 2% inflation target of the Federal Reserve.