Welcome to CrushTheStreet.com’s Weekly Market Wrapup!
Our top story of the week is the Jekyll and Hyde personality of the U.S. equities market, which started out of the gates with a record breaking move in the Dow Jones Industrial Average, but it quickly fell off the horse when Wal-Mart released its disappointing earnings report. Shares of the retailing giant dropped more than 2% at the opening bell, with investors factoring in second quarter profitability forecasts below Wall Street expectations and the smallest growth in quarterly sales in nearly five years. As the world’s largest retailer, Walmart’s performance carries a deserved disproportionate leverage towards investor sentiment, who will likely view their substandard results as a stark contrast to the pomp-and-circumstance rolled out by the government and its mainstream media cronies.
Neither is the problem a company-specific issue. Specialty department store Kohl’s also reported weak earnings, with net income results below analysts’ expectations, driving the stock down almost 4% in the early hours of trading. The S&P retail sector index absorbed the bearishness amongst their key players, moving down 1.6% near the open of the market.
This directly contradicts the implications inherent in the latest macro-economic reports, which stated that new applications for unemployment benefits hit a seven-year low last week while consumer prices in April recorded their largest increase in 10 months. However, here too we witness bouts of schizophrenia, with domestic industrial output falling at its fastest rate in more than a year, a considerable setback in light of economic slowdown during an unusually harsh winter season and dampening hopes of a strong recovery.
The Fracturing of the Stock Market
We have been consistently warning investors about the fracturing of the stock market and filtering out the noise from the mainstream press : one of the key factors that cannot be overlooked is dying momentum. Since the last session of 2013, the Dow Jones has only added about seven-tenths of a percent in valuation. That implies an annual return of less than 1.7%, a figure that will fall short of average inflation rates.
Adding to the pressure are sessions like we witnessed this past Thursday, where the Dow dropped nearly 170 points to close at 16,446 , while the S&P 500 is well-off this week’s high, closing at 1,870 points. The NASDAQ was in an unfamiliar role as the “least bad” index, dropping about eight-tenths of a percent with momentum names like Facebook taking a hard hit.
The precious metals sector had a solid recovery mid-week, with gold moving up above $1,300 dollars and silver trading in the high-19’s, but recent market swings took some edge off the price gains. The big mover was palladium, which regained its $800 dollar trading range despite recent volatility in the commodities sector.
On the digital currency front, bitcoin is holding steady at $450, with very little movement over the past month.
And that will do it for this edition. Thanks for watching and we’ll see you next week!