Yep, that’s the title of the new, just-released James Bond movie. It seemed appropriate for a stock market recap on a week in which the market was shaken, not stirred. Perhaps an even more appropriate title would have been from an older Bond movie: Die Another Day. That was one from the Pierce Brosnan era, but its cast also included Halle Berry and Rosamund Pike,
The stock market’s northerly route over the past several months has been occasionally interrupted by brief jogs to the south. Those sudden veers, which were severe enough to induce panicked cries from the back-seat drivers, proved to be fleeting. In no time at all, the bulls had regained control, the market resumed its drive north and the lost ground was recovered in just a day or two.
The stock market’s skies darkened a bit last week. The sunny economic conditions in recent months, along with a pleasing tailwind of strong corporate earnings, have created an environment in which the major averages were able to slough off a variety of potential threats and rack up an impressive string of record highs. But the skies were not so bright last week,
The market was juggling several significant concerns as last week began. In addition to the growing threat of the Covid Delta variant, the market suddenly had a couple new balls in the air: Afghanistan and a slowing economy in China. Stocks opened lower last Monday, but the market quickly regained focus and was able to ignore the distractions and resume its performance by climbing to slightly higher new highs on both the Dow Jones Industrial Average (DJIA) and the S&P 500 Index (SPX) later that day.
The U.S. stock market seems to be sailing through the perfect non-storm, charting a course through calm seas and favorable winds. The major averages all tacked about 1% higher to new record levels last week. Helping to fill its sails is the continuing tailwind from companies reporting record increases in revenues and profits. And most of the potential threats on the horizon are diminishing: The Unemployment Rate is back down to just 5.4%;
The regularly scheduled programming of steadily rising stock prices was preempted last Monday when share prices suddenly plunged lower. Some of the major averages had their worst day of the year. Popular opinion had it that the steep sell-off was blamed on the market’s concern over the alarming increase in Covid infections involving the Delta variant and the potential for that to derail the economic rebound.
We don’t need a detective to explain how well the U.S. stock market has rewarded investors in recent months. We’ve all witnessed the progression of record highs in the major averages. The footprints in that track higher show evidence of just two brief stumbles that arrested headway along the path, one of which came just last week.
The averages were flat-ish through the first two sessions of the week,
The market was more than a little troubled after the Fed meeting a week-and-a-half ago. The sudden new possibility that the Fed might be forced into tightening its monetary policies sooner than advertised roiled the waters. The Thursday/Friday loss late that week resulted in the Dow Jones Industrial Average (DJIA) and the S&P 500 Index (SPX) having their worst week in months.
Through the winter months, the bond market exhibited obvious and increasing concern about the threat of inflation. In February and March, the yield on the benchmark 10-Year Treasury Notes rocketed higher from 1.00% to a bit over 1.75%. That was a huge increase in just two months-time, and the impact of the suddenly higher rates was clearly visible in the tumbling prices of growth stocks as well as in the new-found strength in “value” stocks,
One old idiom that seems to be a good fit for the market’s current state of mind is “waiting for the other shoe to drop.” That saying apparently dates back to the early 1900s and originated in boarding and rooming houses of the time. When an upstairs neighbor dropped one of their shoes, a second unwelcome thump was sure to follow. The implication of that mindset is that an expected and inevitable event is about to occur;