Monday, October 13, 2014

Global Impact: Economic Volatility Expected to Continue, Few Powerhouses Increasing Profits

According to AFPUS stocks finished sharply lower again Monday (October 13) as worries about global growth weighed on the market a day ahead of major company earnings releases.

The broad-based Standard and Poor 500 sank 31.39 (1.65%) to 1,874.74, while the tech-rich Nasdaq Composite Index slumped 62.58 (1.46%) to 4,213.66. The Dow Jones Industrial Average tumbled 223.03 (1.35%) to 16,321.07.

Plenty of bad news to spread around evenly.

After choppy trade earlier, Wall Street stocks turned decisively negative in the last hour or so of the session.

The decline was "follow-through selling from last week," said Art Hogan, chief market strategist at Wunderlich Securities.

"It's a continuation of concerns about global growth."

COMMENT: As someone who carefully follows the global stock market daily, particularly as it relates to political risk, the last few months are tantamount to being a really, really unpredictable roller coaster.

Reportedly, 2014 was supposed to be the "turn-around year," yet most global companies are hardly jumping for joy, as long as governments conceal their true intentions.

Unfortunately, most companies are hoarding cash and waiting to see what economists will deliver in their next bag of tricks.

Personally speaking, until such time as global businesses have a clue as to the impact of increasing governmental regulation and oversight, a possible hike in corporate taxation levels and attempting to figure out how cash-strapped governments will figure out a way to gouge individuals and business to pay for "new stuff" already included in governmental budgets.

When Washington passes gas, everyone ends up with a belly-ache at some level, it's just a matter of how much discomfort gets passed around.

US stocks suffered a massive sell-off last week, with the S and P 500 shedding more than 3% on global growth fears and the Dow ending in negative territory for the year.

On Monday, the volatility index, often seen as a measure of anxiety in the market, finished at 24.64, the highest level since June 2012.

Please note that that is about the time that President Obama took his pack completely off.

Third-quarter earnings season picks up considerably Tuesday with reports from Dow members JPMorgan Chase and Johnson & Johnson, as well as big banks Citigroup and Wells Fargo. Reports later in the week are due from Intel and Google.

Investors are watching for commentary from multinationals on whether they see weakening conditions overseas will hit fourth-quarter results, Hogan said.

Airline stocks suffered another bad day in the wake of the second confirmed diagnosis of Ebola infection in the United States. American Airlines dropped 7.2%, Delta Air Lines fell 6.1% and United Airlines lost 7.3%. 

Petroleum stocks lost ground as US crude prices fell to their lowest level since December 2012. Dow member Chevron fell 1.6%, ConocoPhillips lost 3.3% and Anadarko Petroleum declined 3.5%. 

Freight rail company CSX shot up 5.9% following reports it was approached by Canadian Pacific about a merger. Canadian Pacific fell 2.3%. 

Targa Resources Partners will buy fellow midstream company Atlas Pipeline Partners and Atlas Energy for $7.7 billion, the companies announced. Targa fell 7.4% while Atlas Pipeline Partners advanced 1.3% and Atlas Energy jumped 14.9%. 

Fiat Chrysler Automobiles fell in its first day of Wall Street trade. The newly merged Italian auto giant debuted on the New York Stock Exchange under the ticker symbol FCAU at $9.00 a share. Shares closed at $8.92, after hitting a peak of $9.55.

The US bond market was closed in observance of Columbus Day.

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