Well, this is an interesting week for investing and stocks. Many technology companies are releasing earnings this week. These companies are not more, nor less, important than other companies, but many of them have become both household names, and some of the most commonly owned household stocks. That makes the earnings more interesting to a lot of Main Street investors.
Due up for earnings reports today was Twitter, which recently welcomed back former CEO Jack Dorsey, who is also still the CEO of his startup company, Square, presumably at least until he can finish taking it public. (Dorsey can then claim victory and a “big exit” for Square, which is a bigger thing than you might think in Silicon Valley.) Twitter stock is down 10 percent as I write this because things are just as bad as everyone thought.
Google, now Alphabet, reported good earnings and its share prices have been climbing, same with Amazon. Microsoft is up, Yahoo is down. And so on.
The big news today, was Apple stock which beat estimates thanks to growth in China, among other things. That will be business as usual for the markets, which is good news. There could have been a lot of uncertainty with an unexpected Apple earnings issue.
U.S. Economy Still Sluggish
Even though the so-called “hawk” are in a hurry to raise interest rates, the economic data still comes nowhere near supporting an increase, at least not to fight inflation. As reported earlier, inflation was so low this year, that there will be no cost-of-living adjustment (or COLA) for Social Security recipients. Add to that news, new data today that durable goods orders have slipped as well. While employment numbers are moving in the right direction, they are hardly heated, and stocks are considered by many to be overvalued right now. In other words, there is no inflation to fear, as the economy continues to grow very weakly.
Pretty much the only reason for the Fed to raise interest rates right now, is because everyone really, really wants to raise rates because… well, because that’s what you do.
It looks like the Fed is about 50/50 on raising rates still this year. Even if they do raise rates, it will be 0.25 percent and that’s it. Even the hawks (the non-extreme ones anyway) aren’t in a hurry to raise rates too far and kill off the weak economic growth that we’ve managed to put together so far.
Of course, the best news so far this year, economically speaking may be that Congress will finally make a budget deal without threatening to shut down the government. That extra stability is an extra bonus in an otherwise unstable situation.
U.S. Stocks and Markets
The market closed down slightly, but is still up for both the month, and the year. Here is what the Year to Date chart for the S&P 500 looks like so far.
That nice little correction in August and September broke up an otherwise sideways year. The good news is that this means the markets didn’t race out too far ahead of themselves this year. The bad news is that there are many analysts who feel like they were already ahead of themselves before this year.
Either way, this week has a lot of chances for some interesting movements for short-term investors.