|
|
By Alex Eule
| Friday, January 21 The New
Normal. We might be turning the
corner on the pandemic, but the stock market is acting a lot like the early
days of Covid. After another rough day, the Nasdaq and S&P
500 both closed Friday with their
worst weekly loss since the week ending March 20, 2020. That
was basically the start of the pandemic quarantines, as most of
us remember all too well. Back then, it was rising cases unnerving the
market. This time, it might actually be how quickly they're falling and how
fast the Federal Reserve is plotting a course to normalcy -- and higher
interest rates. Fed policy makers meet next week, with their
policy statement out on Wednesday, followed by Chairman Jerome
Powell's press conference. Every
meeting is important, but next week's could take on extra significance --
most likely it will be the last meeting before the rate hikes actually
begin in March. Here's my colleague Randall
Forsyth writing
in Barron's this weekend about the
Fed's big week ahead: The Fed has maintained its
crisis policy of zero interest rates and active bond buying, initiated in
March 2020 during the near-meltdown of markets resulting from the Covid-19
pandemic. The virus and its variants persist, but the economy has largely
recovered, with the unemployment rate under 4% and the labor market beset by
worker shortages. Inflation, meanwhile, has soared to 7% from a combination
of supply constraints and pumped-up demand. And nowhere is the impact
of Fed policy more apparent than in asset prices, from the doubling of
the S&P 500 since its March 2020 bottom, to home prices jumping
about 20%. Investors will be listening carefully to what Powell & Co. say
this coming week and beyond about normalizing those policies. The normalization had investors on edge all
week -- and it's amplifying any corporate slip-ups. After Peloton
Interactive cratered 24%
yesterday, today it was Netflix that
held the mantle for beaten-up tech stocks. The streaming giant
tumbled 22% because its subscriber growth badly missed Wall Street's
forecast. It didn't help that the company couldn't give a
clear explanation as to why, as my colleague Eric
Savitz explains. All told, the tech-heavy Nasdaq fell 2.7% on
the day, to finish the week down 7.6%. It's the fourth-consecutive week of
declines for the Nasdaq, which is moving closer to bear-market territory
with every passing trading day. The index is down 14.3% from its
November highs; a bear market is generally defined as a 20% decline from
peaks. The less tech-centric Dow Jones
Industrial Average fell 4.6% on
the week; it's down 6.9% from record highs. The broad-based
S&P 500 is somewhere in between -- down 5.7% on the week and
8.3% from its Jan. 3 peak. Somewhere along the way, investors may
begin looking for bargains, especially in the world of technology. Andrew
Bary has a
few ideas on where to start. Read his story here.
And then enjoy the weekend and a break from falling stocks. Watch our weekly TV show on Fox Business Saturdays at
10 a.m. or 11:30 a.m. ET; or Sundays at 10 a.m. or 11:30 a.m. ET. This week,
what's next for stocks: interviews with David Giroux of T. Rowe Price
and Liz Ann Sonders of Charles Schwab. |
|
|
DJIA: -1.30% to 34,265.37 The Hot Stock: CF
Industries +2.6% Best Sector: Consumer
Staples +0.1% |
No comments:
Post a Comment