11:56pmCT, On the Securities Action of January 27, 2015
Stocks sold off sharply Tuesday morning, but spent most the day rallying off the lows of the day, still U.S. stock indices closed lower. The DJIA closed down -291.49 points, or -1.65% to 17,387.21, after having traded as low as 17,288.31. The S&P500 closed down -27.54 points or -1.34% to 2,029.55, after having traded as low as 2,019.91. The S&PMidCap400 closed down -9.47 points or -0.64% to 1,462.52, after having traded as low as 1,451.91. And the Nasdaq Composite closed down -90.27 points or -1.89% to 4,681.50, after having traded as low as 4,659.83. For five trading days, the DJIA is off -0.73%, the Nasdaq is up +0.57%, the S&P500 is up +0.35%, the S&PMidCap400 is up +2.49%, and the Russell 2000 is up +2.09%.
![Jan. 27, '15 Major U.S. Market Action](https://bernhardtcapitalmanagement.wordpress.com/wp-content/uploads/2015/01/1-27-15-major-u-s-indices.jpg?w=700)
The Cohen & Steers Realty Majors Index, matched my the etf ticker ICF traded down -0.03%, to close at 106.55; On December 31, 2014 it closed at 96.84. REITs have been on a tear!
RSX closed +5.28% to 15.56, CUBA closed +1.91% to 9.06, USO closed at 17.21 and was up +2.02%, XLE closed -0.06% to 77.71, XLF closed at 23.63 and was -1.09%.
TLT (a long term U.S. Treasury Security Index etf) closed +0.16% to 134.57, IEF (an intermediate term U.S. Treasury Security Index etf) closed +0.14% to 109.14, TIP (an intermediate term inflation notes Treasury Security Index) closed +0.32% to 114.49, EMB (sovereign U.S. Dollar denominated high yield government fixed income etf, matching the performance of the JPM EMBI) closed up +0.71% to 111.40, PCY (another sovereign U.S. Dollar denominated high yield government fixed income index etf) closed up +0.49% to 28.59, HYG (high yield corporate fixed income index etf) closed down -0.08% to 90.35, JNK (high yield corporate fixed income index eft) closed -0.13% to 39.02, and QLTC (a CCC high yield corporate fixed income index etf)closed up +1.39% to 49.12. The 30 year Treasury Security yield closed at 2.391%, the 10 year Treasury Security yield closed at 1.821%, the 5 year Treasury Security yield closed at 1.337%.
EPS Releases, mostly of MSFT, PG, and CAT, as well as a disappointment for Durable Goods Orders economic data were the catalysts for the selloff today. MSFT traded down -9.25% to 42.66, PG traded down -3.45% to 86.49, and CAT traded down -7.18% to 79.85.
In other news, AAPL reported its quarterly EPS and handily beat expectations, claiming it sold a lot of iphones in China. It closed Tuesday at 109.14, and in afterhours trading it’s trading up +6.26 or +5.74% to 115.40. Quarterly profits were up +38% compared to a year ago, to $18 billion, after selling 74.5 million units of their iphone. The next HYPE(!!!!!!!!!!) stock to report earnings, chosen at random, is Facebook (ticker FB) tomorrow (Wednesday), after the close.
If I had to guess, the rest of the week should be good, I look forward to the GDP report, and believe it will be a catalyst for a rally. As of 11:48pmCT the Euro traded at 1.1343, crude oil at 45.60. S&P Futures vs. Fair value are indicating an implied open for the S&P500 of +21.30 for Wednesday’s trading, and +148.79 for the implied open of the DJIA (click here for an update on the Futures Markets).
Lastly, I can’t believe the ignorance and incompetence of the huge storm weather prediction of the NWS & NOAA issued to weather reporters. They were nearly declaring a state of national emergency in the entire north east for today, yet when the storm showed up, nearly nothing came down! They claimed several feet would burry NYC, but what showed up was just eight inches of snow! Good one! Long Island and New England took much of the snowfall. Lastly, the Obama Administration has given up on the idea to raise taxes on 529 College Savings Accounts (which currently have tax deferred status). Good job. The mere proposal of taxing at 529 plan was a real cheap shot to investors and savers in the USA. Looks like their reconsideration was a little more well thought out. And my advice would be to not suggest taxing pensions, or IRA accounts next! “READ MY LIPS… NO NEW TAXES!” Grid lock is good. And legislatures and lawmakers need to know and understand that you can’t regulate prosperity, and you can’t regulate the business cycle away; Recessions can not be outlawed, and further regulation of banks, brokerages, insurance, and reinsurance companies is also not the solution to anything!; New rules and regulations are not the solution to anything. Everything is already illegal, if you don’t believe me, read this book: “Three Felonies A Day!” What needs to be prohibited at once, is the creation of new laws.
By Andrew G. Bernhardt